Tag: Robert Boslego

U.S. Crude Production In February Reflects Unscheduled GOM Maintenance

Posted on by Robert Boslego

The Energy Information Administration reported that February crude oil production averaged a surprising 11.683 million barrels per day (mmbd), down 187,000 b/d from January. The drop was totally the result of unscheduled maintenance in the Gulf of Mexico (GOM), which averaged 1.719 mmbd. Production had been over 1.9 mmbd in November through January.

Crude Production

Despite drops in January and February, crude production still rose by a spectacular 1.219 mmbd from June through February, a period when capacity takeaway constraints had been expected to slow down the growth in Texas.

Production in Texas rose by 69,000 b/d to a record 4.890 mmbd. That was nearly offset by a decline in North Dakota of 64,000 b/d due to seasonal factors. Continue reading "U.S. Crude Production In February Reflects Unscheduled GOM Maintenance" →

World Oil Supply And Price Outlook, April 2019

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for April, and it shows that OECD oil inventories likely bottomed last June at 2.806 billion barrels. It estimated stocks fell by 18 million barrels In March to 2.829 billion, 23 million barrels higher than a year ago.

However, throughout 2019, OECD inventories are expected to rise rather quickly through November. At year-end, EIA projects 2091 to be with 2.915 million barrels, 53 million more than at the end of 2018.

For 2020, EIA projects that stocks will build another 70 million barrels to end the year at 2.985 billion. That would push stocks into glut territory.

oecd oil inventories

Oil Price Implications

I updated my linear regression between OECD oil inventories and WTI crude oil prices for the period 2010 through 2018. As expected, there are periods where the price deviates greatly from the regression model. But overall, the model provides a reasonably high r-square result of 80 percent. Continue reading "World Oil Supply And Price Outlook, April 2019" →

U.S. Crude Production In January Displays A Seasonal Lull

Posted on by Robert Boslego

The Energy Information Administration reported that January crude oil production averaged 11.871 million barrels per day (mmbd), down 90,000 b/d from December. Despite the drop in January, crude production still rose by a spectacular 1.407 mmbd from June through January, a period when capacity takeaway constraints had been expected to slow down the growth in Texas.

crude production

The year-over-year gains have been especially impressive with the January figure being 1.876 mmbd. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For January, that additional gain is about 6,950 b/d. Continue reading "U.S. Crude Production In January Displays A Seasonal Lull" →

Round 2: Trump Vs. OPEC

Posted on by Robert Boslego

With oil prices having staged a recovery during the first quarter of 2019, primarily due to the withholding of oil supplies from Saudi Arabia, President Trump has once again entered the oil market as a threat. Not since OPEC’s founding in 1960 has an American president been as vocal or involved as Trump.

Trump’s intervention in “Round 1,” summarized below, shocked the market, causing a massive price collapse. However, with close scrutiny of the president’s views, both before taking office and over the past year, the market should not have been so surprised.

Saudi Arabia is in a delicate position. On the one hand, it needs oil prices in the $80s to support it's country’s budget, even if lifting costs are $10 or less. It also knows that a “high price” is not the best price longer-term, due to cutbacks in demand and the increasing availability of substitutes, such as U.S. shale.

But possibly most importantly, it depends on the U.S. for its security. And looking forward, it wants U.S. investment to help diversify its economy as the oil age wanes.

Simply put, it cannot afford to ignore this U.S. president, whose first international trip was to KSA. There is an important political and economic link to the U.S. that it did not have even one president ago (Obama). And its arch-nemesis, Iran, at the same time is being severely harassed by President Trump. Continue reading "Round 2: Trump Vs. OPEC" →

World Oil Supply And Price Outlook, March 2019

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for March, and it shows that OECD oil inventories likely bottomed last June at 2.806 billion barrels. It estimated a 21-million barrel decline for February to 2.837 billion, 9 million barrels lower than a year ago.

However, throughout 2019, OECD inventories are expected to rise rather quickly through November. At year-end, EIA projects stocks to be 2.918 billion barrels, 64 billion more than at the end of 2018.

For 2020, EIA projects that stocks will build another 82 billion barrels to end the year at 3.000 billion. That would push stocks into glut territory.

oecd oil inventories

Oil Price Implications

I updated my linear regression between OECD oil inventories and WTI crude oil prices for the period 2010 through 2018. As expected, there are periods where the price deviates greatly from the regression model. But overall, the model provides a reasonably high r-square result of 80 percent. Continue reading "World Oil Supply And Price Outlook, March 2019" →