As Crude Prices Decline … U.S. Imports Increase

As Crude Prices Decline … U.S. Imports Increase

13th November 2015

The U.S. onshore rig count continued lower, down 5 this week.  With WTI hovering just above US$40 per barrel and the slow pace of weekly rig releases, onshore operators are striving to survive the lower for longer oil market.  

Refineries continued to increase operating rates last week; however, an increase in U.S. production and imported oil trumped the increase of 300,000 barrels per day.

Crude supply historically has started to draw down once refining capacity returned; however, with oil prices at current levels, imported oil is filling U.S. storage. 

Source: EIA Data and GCA Analysis

As refinery runs increase, crude inventories are expected to remain flat to small increases existing 2015.  At 487 million barrels, U.S. crude inventories still remain significantly above historical levels. 

U.S. Drilling Activity…..

The total number of active onshore rigs now stands at 734, down 1,142 (~61%) from a November 2014 high of 1,876.  Across the three major unconventional basins, the oil rig total declined to 349 (down 2 last week), with Eagle Ford up 1, Permian down 2 and Williston down 1.  Horizontal rigs increased by 2, continuing an upward trend.

Total U.S. rig count (including the GOM) declined 4 last week, with rigs targeting oil increasing by 2 for an eleven-week total decline of 101.  

Oil Price….

Oil prices slumped toward their lowest levels since late August as the U.S. government on Thursday reported a seventh consecutive weekly increase in crude supplies.

Brent, the global benchmark for oil, was down almost US$4 at US$43.82 a barrel, reflecting a loss of 7.8% on the week.

U.S. crude also slid almost US$4 to US$40.74, down 8% on the week.

U.S. Supply and Demand…..

U.S. crude oil refinery inputs increased to an average 15.9 million barrels per day, with refineries at 89.5% of their operating capacity last week.

On the supply side, U.S. oil production in the Lower 48 increased by 8,000 barrels per day last week, with total production at 8.659 million barrels per day.  Impacts from GOM projects continuing to ramp production offset onshore TLOs forecasted decline.

U.S. crude imports averaged over 7.4 million barrels per day last week, a significant increase of 434,000 barrels per day from the previous week.  Over the last four weeks, crude oil imports averaged 7.2 million barrels per day, 2.5% above the same period last year.  

Crude oil inventories increased by 4.2 million barrels from the previous week, the crude build being driven by a significant increase in imported oil.  Cushing’s storage (the main price point for WTI) increased by 2.3 million barrels.  At this time last year, Cushing storage stood at 40% (22.5 million barrels) of today’s 55.4 million barrel inventory.

Source: EIA Weekly Update and GCA Analysis

 

 

 

 

 

 

 

Authors

As Crude Prices Decline … U.S. Imports Increase

P Kevin Galvin

Principal Advisor, Field Development Planning - kevin.galvin@gaffney-cline.com

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