Crude leaning on Russian sanctions

Oil Outlooks

According to Bloomberg, The EIA report is projected to show that nationwide crude supplies declined by 2.9 million barrels to 372.1 million.

Here are my EIA guesstimates:

CRUDE -2.5M – Let’s be honest here, estimating the oil supply this week is like a woman’s shoe size. They’ll tell you what they think it is, but I guarantee you the truth will be a few sizes bigger. We’re going to see a dip in imports, but not too much. We’ll stay close to the 7.25M b/d average of 2014. As for the runs, it’s going to back off a little, but still remain strong. The only thing that we need to watch is if we draw (big or small) and we see the action/reaction of Russian sanctions, it will dictate how it hits our market.

GASOLINE +1.0M – I think by this point everyone knows I’m always thinking draw. Well I am still thinking draw, but I know that production will bounce back this week and we’ll again see it above 10M b/d. Here’s the rub, if we don’t see a build and production stays under 10M b/d, then get ready kiddies, the pump may soon be putting the “4” at the front of the price. If demand stays over 9M this is where it’s going to make the difference. Hard to compare it to past years, but the US is on firm ground. 

DISTILLATE +1.5M – I’m not going to go all I-G-G-Y and get fancy. We will be building stocks here, but it’s likely that we’re going to be doing as much because of weaker demand. Maybe a little push higher in production, but it will be tough if gasoline takes the yield back. Worth a lot to notice that as supply builds, price will not fall off too much as this is the market really waiting on the sanctions.

UTILIZATION -0.5% - In a perfect world we’d be looking to keep refineries running high and making as much as they can, but nothing in this world is even close to perfect. 

CUSHING +1.25M – It’s been a long summer and if we’re going to concentrate on keeping the cheap crude flowing, the inventories here can continue to fall. Every week that passes is another week closer to Seaway Twin.

About the Author

Carl Larry is president of Oil Outlooks and Opinions LLC. Follow him on Twitter (@oiloutlooks) or on his website.

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