Crude Whipsaws Following Mixed Inventory Data

USA crude imports rose by 274,000 barrels per day.

Forecast production begins increasing in late 2016, returning to an average of 8.7 million b/d in the fourth quarter.

USA crude stocks fell last week, breaking a streak of builds, while gasoline and distillate inventories rose, data from the Energy Information Administration showed on Wednesday. Market surveys projected that United States crude oil inventory would rise by 0.3 MMbbls for the week ending December 4, 2015. In the November edition of the STEO, which was published before EPA’s final RFS rule, the EIA predicted 2015 and 2016 ethanol production would average more than 950,000 barrels per day.

Total gasoline inventories increased by 800,000 barrels last week, according to the EIA, and have moved into the upper half of the five-year average range. Global oil inventory builds in the third quarter averaged 1.8 million b/d, down from 2 million b/d in the second quarter, which had the largest inventory builds since fourth-quarter 2008.

Total marketed natural gas production hit a record high of 81.1 Bcf/d in September, and EIA expects marketed production to average 79.6 Bcf/d this year (up 6.3% from 2014) and reach 81.1 Bcf/d in 2016. A report from the American Petroleum Institute on Tuesday suggested that supplies fell by 1.9 million barrels which some have attributed to the stabilisation in oil prices.

OPEC members at the meeting also voted unanimously to reactivate Indonesia’s OPEC membership, despite its remaining a net importer of crude oil.

OPEC did what everyone expected last week-nothing-and oil markets reacted badly.

Refinery crude runs USOICR=ECI fell by 151,000 barrels per day, EIA data showed.

EIA expects Iraq’s production growth to slow in 2016 because of budgetary constraints that have prompted the Iraqi government to request global oil companies (IOC) operating in the south to reduce spending plans. The 2015 US oil demand growth, however, was set to increase by 290,000 bpd from 330,000 bpd previously.

Figure 2. World liquids production surplus of deficit and Brent crude oil price. EIA forecasts USA regular gasoline retail prices to average $2.04/gal in December and $2.36/gal for 2016.