This Week in Petroleum 1-16-08

With all of the traveling, and then trying to catch up after the holidays, I haven’t had time to do a proper TWIP. Anyway, mostly what we saw for the past month were crude draws, and gasoline inventories climbing back up and getting in pretty good shape prior to spring turnaround season. Part of the draw down in crude was tax-related. Many countries, including the U.S., tax crude inventories at year end. So, there is a bit of a balancing act as refiners try to draw down inventories while still maintaining enough on hand to weather any supply disruptions.

This week saw a large gain across the complex, and crude prices are falling as a result.

Summary of Weekly Petroleum Data for the Week Ending January 11, 2008

Some highlights:

U.S. crude oil refinery inputs averaged nearly 15.0 million barrels per day during the week ending January 11, down 760,000 barrels per day from the previous week’s average. Refineries operated at 87.1 percent of their operable capacity last week.

U.S. crude oil imports averaged 10.4 million barrels per day last week, up 583,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.0 million barrels per day, or 219,000 barrels per day more than averaged over the same four-week period last year.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 4.3 million barrels compared to the previous week. At 287.1 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories increased by 2.2 million barrels last week, and are near the upper limit of the average range. Total commercial petroleum inventories increased by 3.6 million barrels last week, and are in the middle of the average range for this time of year.

CNN’s take:

Oil below $90 on surprise supply increase

NEW YORK ( — Oil prices fell sharply Wednesday after the government reported a surprise increase in crude supplies.

U.S. light crude for February delivery fell $2.20 to $89.62 a barrel on the New York Mercantile Exchange. Oil had traded down $1.21 prior to the report’s release.

In its weekly inventory report, the U.S. Energy Information Administration said crude stocks grew by 4.3 million barrels last week, after posting declines for eight weeks in a row. Analysts were looking for a drop of 300,000 barrels according to a Dow Jones poll.

“The market looked at the report as bearish, given the increase in crude stocks,” said Andrew Lebow, a broker at MF Global in New York.

My take: As we move into refinery turnaround season from late February through April, we should see crude inventories start to build, and gasoline inventories should get pulled down. That should start a run toward $4 gasoline.

4 thoughts on “This Week in Petroleum 1-16-08”

  1. The way we get to $4 gasoline is by taxing ourselves there.
    Crude tumbling, and where is the bottom?
    The USA now using less refined crude every month, year over year.
    Falling demand for crude, and all-time record production.
    Recession? I hope not.

  2. I’m still hoping to see the update on how well RR’s predictions for last year turned out. Better than “peak demand” Cole’s I suspect. I believe we will reach $4/gal gasoline with no changes in law to increase gasoline tax. I don’t know if it will be this year or next. Maybe it’ll be this year if the dollar keeps declining in value against other currencies.

  3. BP says demand will peak before supply…that’s what I have been saying…

    UPDATE 2-World oil demand to peak before supply – BP

    By Alex Lawler

    LONDON, Jan 16 (Reuters) – World oil production may peak in the coming years, but it will be because of a decline in demand for petroleum rather than constraint on supply, a BP economist said on Wednesday.

    The comments come in the wake of remarks from other industry officials who in recent months have questioned mainstream supply forecasts, suggesting a peak in output may be closer than the industry has previously admitted.

    “I believe there is a realistic possibility that world oil production will peak within the next generation as a result of peaking demand,” BP Special Economic Advisor Peter Davies told a meeting at parliament organised by a group of lawmakers looking into peak oil.

    A rally in oil prices, which hit a record high above $100 a barrel earlier this month, is leading to growing interest in peak oil — the view that supply has reached, or will soon reach, a high point and then fall.

    London-based BP, the world’s third-largest fully publicly traded oil company by market value, dismisses the view that there is a problem with the amount of oil left in the ground.

    Statistics complied by BP show the world has proven oil reserves of 1.2 trillion barrels, enough to sustain current output for 40 years.

    Rather, Davies said environmental regulations, including efforts to reduce greenhouse gas emissions, could cause consumers to move away from oil.

    “I think we will run out of demand before we run out of supply,” he said. “There’s a distinct possibility that global oil consumption could peak as a result of climate policies.”

    The BP economist said there were also concerns whether there is enough investment. Many major producing countries ban foreign investment in their oilfields or allow it on terms the oil firms deem uncompetitive.

    “An imminent peak in oil production is not likely,” Davies said. “Valid concerns remain over investment, especially in resource-rich regions.”

    Davies said it was possible to boost world oil production to 100 million barrels per day, a rate senior figures, such as the chief executive of French oil company Total (TOTF.PA: Quote, Profile, Research), have questioned in recent months.

    The world is expected to need more than 100 million bpd of oil later this century, according to forecasts from the International Energy Agency and others, up from around 86 million bpd now.

    “I believe 100 million barrels per day is achievable,” Davies said. “This is achievable in resource terms but it does come down to how much investment is going to take place.” (Reporting by Alex Lawler; editing by Marguerita Choy)

  4. i posted this question on the oildrum, so i’ll post it here too…

    Question to the peak oilers out there:

    where do i go for production data for individual wells?
    i’m not looking for entire oil fields, or whole countries, but just individual oil wells.

    reason for this: i’m helping my son do a paper on peak oil and would like to show hubbert’s bell curve for 1.) individual wells; 2.) individual fields; 3.) individual oi producing nations. so your comments are helpful.

    * i am really only interested in norway’s data because of their thorough transparency and that they are in decline and also they’re not the US…but can’t seem to find their well by well production data.

    thx for the help.

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