This week’s US stocks report contained many surprises and reported several new recent records. US crude stockpiles underwent the largest weekly decline in nearly a year last week falling by 10 million barrels; this decline, however, was offset by a 6.7 million barrel jump in gasoline stocks and a 5.26 million barrel jump in distillates. Refineries operated at 92.6 percent last week which was the highest since July and unusual for this time of year, while crude imports fell by nearly a million b/d from the previous week. Together these factors lowered US crude inventories by 3-4 times what analysts were expecting and increased oil product inventories by an amount similar to the drop in crude stocks.
This is time of the year when refiners make efforts to avoid having large crude stocks which are subject to taxes along the Gulf Coast at the end of the year. Seven of the ten million barrel drop in crude stocks took place along the Coast. Bad weather last week may have contributed to the drop in imports and lower exports of distillates and gasoline. Demand for gasoline fell for the fifth consecutive time last week to 8.35 million b/d. Stockpiles at Cushing, Okla. climbed by 625,000 barrels and US crude production continued to climb last week reaching 8.08 million b/d, the most since 1988.
The report sent NY oil prices down $1.07 on Wednesday to close at $97.44 as traders were more concerned about the build in oil products and the apparent drop in gasoline demand than in the decline in crude inventories which was attributable to technical factors. London oil prices fell 30 cents to $109.70 on the news that Libya may be resuming some oil shipments shortly.
Natural gas futures climbed sharply this week due to the cold weather engulfing much of the US. They closed Wednesday at $4.34 per million BTUs– up nearly 85 cents in the past six weeks.
The IEA released its monthly Oil Market Report on Wednesday. The Agency revised upwards its forecast of global oil demand in 2013 by 130,000 b/d to 91.2 million b/d. It now thinks that global demand will increase by 1.2 million b/d in 2013 and 2014 so total demand will be around 92.4 million b/d by the end of next year. Global oil supplies increased by 810,000 b/d year-over-year in November as Non-OPEC production increased by 1.9 million b/d was offset by a 1.1 million b/d drop in OPEC production.
The Iranians say there is progress in the continuing nuclear talks. The usual number of bombs went off in Iraq this week. The US suspended aid to the Syrian rebels as radical Islamist forces took over warehouses where US non-lethal aid supplies to the more moderate insurgent groups were being stored. Ports in Eastern Libya that have been closed for four months are supposed to reopen soon.