Vehicle miles traveled… Advisor Perspectives

by Jim Colburn • Friday, April 28, 2017

Jill Mislinski at Advisor Perspectives puts together some nice charts relating to fuel demand in the US here:

The stronger economy and lower gasoline prices have increased road travel to new highs, but when adjusted for population growth we really don’t drive as much as we used to:

So, both narratives, “we’re driving less” and “we’re driving more”, seem to be correct…

 

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Oil shortages possible by 2020… IEA

by Jim Colburn • Thursday, April 27, 2017

Sarah Kent at the Wall Street Journal reports on the IEA’s concern that oil shortages are possible soon (just in time to run smack into “peak gas demand”?):

“Shale “is not enough by itself,” the IEA’s Mr. Birol said.

To meet rising demand and offset underlying declines, the industry needs to approve production of around 18 billion barrels of new resources each year between now and 2025, according to the IEA. If business doesn’t pick up this year, the volume of new conventional oil production that will need approval to keep pace with demand and offset underlying declines rises to just under 21 billion barrels a year.”

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Refinery runs are soaring… Fuelfix

by Jim Colburn • Thursday, April 27, 2017

From Fuelfix:

”Even though crude imports jumped higher by over 1.1 million barrels per day last week, a climb into unchartered territory by refinery runs meant that crude inventories were drawn down by 3.6mn bbls. Refinery runs jumped to 17.3mn bpd, the highest level on record, as cheap and available crude – as opposed to strong demand – is driving on refining activity. Refinery runs are now a surreal 1.44mn bpd – or 9 percent – higher than year-ago levels:

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Mexico completes hedging program… Reuters

by Jim Colburn • Tuesday, April 25, 2017

Here is the story from Reuters:

”Mexican state-owned oil company Pemex said on Tuesday it had completed an oil hedging program for May to December that guarantees a price of $42 dollars per barrel for up to 409,000 barrels per day.

Pemex said the recently completed hedge, which was the first such move in 11 years, cost it $133.5 million.

The Pemex hedge is separate to the much-larger oil price hedge undertaken by Mexico’s finance ministry.”

 

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People aren’t buying enough gas… CNBC

by Jim Colburn • Tuesday, April 25, 2017

Here is the gist of the CNBC piece on gasoline demand:

”Demand for U.S. gasoline has recovered since January, but remained below 2016 levels throughout much of this year. Now, analysts are worried weak consumption will cause gasoline stockpiles to keep building and eventually result in weaker crude oil demand and pricing.”

However the EIA already estimates a slightly lower number for gasoline consumption in 2017 than 2016 (9.30 vs. 9.33 mbd)… The EIA estimates world consumption growth for 2017 at +1.5 mbd…  We will certainly be watching gasoline demand very closely as the season unfolds, but zero demand growth in US gasoline does not necessarily mean lower prices…

 

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Ohio, Pennsylvania increased gas production most in 2016…EIA

by Jim Colburn • Tuesday, April 25, 2017

Here is the chart from “Today in Energy” showing gas production changes in selected states:

And here is another look:

 

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Can the bankers sell Saudi Aramco? … Nick Butler, Financial Times

by Jim Colburn • Monday, April 24, 2017

In today’s Financial Times, Nick Butler discusses three issues for Saudi Aramco’s IPO:

 

 

 

 

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Days supply, gasoline, distillates, crude oil… EIA

by Jim Colburn • Friday, April 21, 2017

Distillates look “tight” from a days supply (stock levels divided by daily implied demand) perspective:

 

Gasoline is looking better balanced:

Crude is still troublesome:

We need to see increased crude oil throughput to refineries (expected) and good demand for gasoline and distillates (uncertain) for total stocks to decline… Charts are from the This Week in Petroleum

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Pipeline capacity, increasing Permian output… EIA

by Jim Colburn • Friday, April 21, 2017

The EIA suggests pipeline capacity growth will be sufficient to move increasing Permian production:

“Pipeline infrastructure in the Permian is now better equipped to handle new production than it was in 2014. Several of the pipelines that came online to accommodate rising Permian production in 2014 (Magellan’s BridgeTex pipeline, Sunoco Logistics’ Permian Express pipeline, and Plains All American’s Cactus pipeline) are undergoing expansions set to come online later this year, adding approximately 340,000 b/d of capacity.”

Here is the recent historical price differential:

Here are production trends in the Permian:

 

Here is the link for This Week in Petroleum

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Is Chinese Growth Overstated?… Liberty Street Economics

by Jim Colburn • Friday, April 21, 2017

The authors of the study mentioned in a previous blog post explain their paper succinctly here ….

“It has been well established that growth in nighttime light intensity is a good proxy for economic growth. By gauging how well changes in different economic variables correlate to fluctuations in nighttime light intensity, we can see which series are more reliable as growth indicators.”

“Looking back at the prediction for the end of 2015, we can reject the dire growth-collapse scenarios that were suggested by some of the Wall Street indices at the time, with it being very unlikely that the true growth rate of China was much below 6 percent. On the contrary, while we generally can’t reject that the official growth estimates are correct, we also can’t reject that they have understated Chinese growth since 2012, with the true level being closer to the average seen in the 2005-12 period. Our results are consistent with work by Rosen and Bao, who argue that Chinese statistical services have chronically underestimated the size of the service sector. Rosen and Bao’s hypothesis is consistent with our finding that rail freight growth should receive less weight than the other indicators in the Li Keqiang index. Hence, as the Chinese economy becomes increasingly service-oriented, the (conventional) Li Keqiang index will likely send increasingly faulty signals about the state of China’s economy. In fact, our estimate for Chinese growth shows an appreciable acceleration in 2016, even as the official growth rate remained virtually unchanged.”

Do read the whole thing…

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