Weekly Petroleum Report - 8/31/05

[BoeingBoy]

Since this week's report from the EIA covers last week, it was basically a non-event since there weren't any big surprises in it. Current petroleum trading is being driven almost entirely by the effects of hurricane Katrina, so next week's report will be anxiously awaited.

That said, here's what this week's report contained.....

U.S. crude oil imports averaged over 10.5 million barrels per day last week, down 114,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.6 million barrels per day, an increase of 158,000 barrels per day from the comparable four weeks last year.

U.S. crude oil refinery inputs averaged over 16.2 million barrels per day during the week ending August 26, up 572,000 barrels per day from the previous week's average.

Refineries operated at 97.1 percent of their operable capacity last week. Gasoline production increased, averaging 8.8 million barrels per day, while distillate fuel production also increased, averaging over 4.3 million barrels per day.

U.S. commercial crude oil inventories (excluding those in the SPR) decreased by 1.5 million barrels from the previous week. At 321.4 million barrels, U.S. crude oil inventories are well above the upper end of the average range for this time of year.

Total motor gasoline inventories declined by 0.5 million barrels last week, putting them near the bottom end of the average range.

Distillate fuel inventories increased by 2.7 million barrels last week, and are above the upper end of the average range for this time of year.

Total product supplied over the last four-week period has averaged 21.5 million
barrels per day, or 2.3 percent more than averaged over the same period last year.

Over the last four weeks, motor gasoline demand has averaged over 9.4 million barrels per day, or 1.2 percent above the same period last year.

Distillate fuel demand has averaged 4.0 million barrels per day over the last four weeks, or 3.3 percent above the same period last year.

Kerosene-type jet fuel demand is down 6.7 percent over the last four weeks compared to the same four-week period last year.

Now the price data. Since I was out of town for last week's report, I've included those as well.

Spot prices for jet fuel.....8/26.......8/19.......8/12......8/05.......7/29.......7/22.......7/15.......7/08.......7/01
New York Harbor.........$1.9100 $1.9550 $1.9550 $1.7430 $1.6750 $1.6115 $1.6713 $1.7230 $1.7323
Gulf Coast...................$1.8675 $1.9450 $1.9450 $1.7230 $1.6645 $1.6350 $1.6450 $1.7005 $1.7060
Los Angeles................$2.0000 $2.0975 $2.0975 $2.0050 $1.8250 $1.7000 $1.7100 $1.7700 $1.7900

Spot prices for crude......8/26.....8/19.....8/12.....8/05.....7/29.....7/22.....7/15.....7/08.....7/01
WTI Cushing................$65.51 $66.71 $66.71 $62.44 $60.71 $57.75 $58.36 $59.71 $59.11
Brent...........................$64.21 $67.26 $67.26 $60.73 $59.77 $56.98 $56.98 $59.00 $56.41

Current crude prices:

WTI Cushing...$69.40 (@ approx 11:30 8/31/05 per Bloomberg)
Dated Brent....$66.20 (@ approx 11:40 8/31/05 per Bloomberg)
NYMEX............$69.80 (@ approx 11:10 8/31/05 per Bloomberg)
CNBC...............$69.45 (@ approx 11:50 8/31/05)

Finally, average spot prices of jet fuel by month (by quarter once the quarter is over):

Delivery point....1Q05......2Q05......Jul05.....Aug05*.....3Q05*
NY Harbor...... $1.4861 $1.5833 $1.6859 $1.8828 $1.7891
Gulf Coast..... $1.4400 $1.5649 $1.6647 $1.8556 $1.7647
Los Angeles.. $1.5228 $1.7008 $1.7525 $2.0176 $1.8914
* thru Aug 30

Finally, there has been some discussion about the Persian Gulf countries and the effect they have, so here are some statistics for June crude oil imports to the U.S.

OPEC countries supplied 47.24% of our imported crude, but
Persian Gulf countries supplied only 22.23% of our imported crude

The "Top 10 List" of countries we imported crude from in June 2005:

1 - Canada (51,147,000 bbls)
2 - Mexico (48,473,000)
3 - Saudi Arabia (47,950,000)
4 - Venezuela (38,766,000)
5 - Nigeria (30,347,000)
6 - Iraq (18,241,000)
7 - Angola (11,903,000)
8 - Algeria (8,765,000)
9 - Ecuador (8,630,000)
10- United Kingdom (8,055,000)

Jim

 

[BoeingBoy]

Oops, I made a mistake in the title. This report covers the week ending 8/26/05 and I put today's date in the title.

Sorry for any confusion....

Jim

 

[BoeingBoy]

Some other nuggets from various government reports on the effects of Katrina....

482 of 819 (59%) of manned oil platforms in the Gulf region were evacuated.

79 of 137 (59%) oil rigs in the Gulf region were evacuated.

1,371,814 bbls/day of production in the Gulf is "shut in" - this is 95% of daily production.

Since 8/26, 6,055,220 bbls of oil have been "shut in" in the Gulf region, equivalent to 1% of annual Gulf production.

Daily Katrina update

Royal Dutch Shell said its Mars platform sustained significant damage.

BP observed no damage to several of its facilities from helicopter flyovers.

Kerr-McGee plans to restart half of its 130,000 bbl/day production over the weekend.

ExxonMobil, Conoco, and Apache are inspecting their facilities.

The Strategic Petroleum Reserve at New Orleans Elmwood complex remains shut down. Bayou Choctaw, Bryan Mound, Big Hill and West Hackberry sites, however, are operational and will be able to provide crude oil in the loan program.

Colonial and Plantation petroleum product pipelines, which provide the majority of gasoline, diesel fuel, and jet fuel to the Southeast, Mid-Atlantic, and Northeast states, are currently not operating due to loss of power at key pump stations in LA and MS.

Dixie pipeline (a propane line) is also shut down. Other product pipelines are not experiencing any problems: TEPPCO is moving products from Texas into the Northeast and Centennial is moving products from Texas into Illinois. Capline, a crude oil pipeline serving the Midwest, is shut down.

Legacy (an offshore drilling company) reported that the US Coast Guard has blocked all channels. They are not able to assess the damage to rigs in the Dauphin Island area as there are no helicopters available for hire.

An oil rig which broke away and struck a bridge also sheared a pipeline owned by Plains Marketing.

Page 3 of the following pdf file shows refinery status in the areas affected by Katrina as of 10:00 AM EDT today.

Daily Report

EIA has also issued a report today on the effects of Katrina.

Special EIA Report

Jim

 

[BoeingBoy]

The Air Transport Association's statistics of Katrina's effects ....

# The hurricane has crippled oil and gas operations in the Gulf Coast and shut down most of the output from the region, which accounts for nearly 1/3 of domestic oil production.

# 19% of domestic refining capacity is down as a result of Katrina.

# The nation’s supply of jet fuel has been cut 13% because of damage to refineries on the Gulf Coast. Put another way, that's 200,000 few barrels of jet few that are available out of 1.5 million barrels produced daily before the storm.

# Oil imports are down 10% (about 1.1 million barrels) as a result of damage to Louisiana's major oil-import terminal.

# As a result of Katrina, daily jet fuel prices jumped 35 cents, from $1.91 the week before the hurricane to $2.27 after the storm.

# Every penny increase in the price of fuel equals $190 million of additional fuel cost for the industry.

# U.S. airlines consume 19 billion gallons of jet fuel annually.

# If the 35-cent increase in jet fuel prices in the last week was spread over the 19 billion gallons consumed annually by carriers, that additional cost borne by the industry would equal $6.8 billion.

Jim

 

[usair_begins_with_u]

Im glad you condense this information for us here.. its good stuff.

On a worse note, Im hearing rumors about gasoline shortages in the south, namably Atlanta, and Charlotte.. Can any one confirm?

I've read on other message boards people waiting in line for hours, and gas stations shutting down early. Some employeers letting workers out early to get gas..

 

[ClueByFour]

Colonial and Plantation petroleum product pipelines, which provide the majority of gasoline, diesel fuel, and jet fuel to the Southeast, Mid-Atlantic, and Northeast states, are currently not operating due to loss of power at key pump stations in LA and MS.

[post="295219"][/post]​

Slight update: http://www.colpipe.com/press_release/pr_73.asp

Colonial should be able to get to 25-35 percent capacity immediately, and perhaps 50-60 by the weekend.

 

[BoeingBoy]

Good news, Clue. Hopefully, they can get enough refined product to keep whatever capacity they're able to bring online full.

Jim

 

[ClueByFour]

The other somewhat forgotten chunk of the puzzle is the status of navigation up and down the Mississippi--a lot of the refined products are barged up the Mississippi and Ohio rivers--PIT, for instance, gets a large chunk of it's jet-A on barges (or so they say).

 

[BoeingBoy]

The first of today's updates on refinery/pipeline status in the Gulf region....

* [This is unchanged from yesterday's 4PM report] MMS reports that of the 70 companies reporting, 482 platforms and 79 rigs remain evacuated. Oil production shut in is 1,371,814 barrels per day, which represents 91 percent of daily oil production in the Gulf. Natural gas production shut in is 8,345 billion cubic feet per day, or 83 percent of daily gas production. Evacuations represent 59 percent of platforms and rigs operating in the Gulf of Mexico. For companies reporting to MMS, cumulative shut in production for the period 8/26/05 – 8/31/05, represents about 1 percent each of the yearly production of oil and natural gas in the Gulf of Mexico. www.mms.gov

* The LOOP has suffered minimal damage at a booster station and the storage terminal. Emergency generators are in place and repairs are scheduled. Deliveries from the St. James Terminal are expected to commence tomorrow. The single biggest need now is for power restoration by Entergy.

* [Also unchanged from yesterday's 4PM report] The Strategic Petroleum Reserve at New Orleans Elmwood complex remains shut down. Bayou Choctaw, Bryan Mound, Big Hill and West Hackberry sites, however, are operational and will be able to provide crude oil in the loan program noted above.

* [As reported last night by Clue] Colonial and Plantation petroleum product pipelines, which provide the majority of gasoline, diesel fuel, and jet fuel to the Southeast, Mid-Atlantic, and Northeast states, have taken steps to begin operation.

* Colonial is now operating at 750,000 barrels per day. Once additional generators are activated at inactive pump stations, production will increase to 1.2 to 1.3 million barrels per day. Further increases cannot be made until normal power is restored. The capacity of Colonial is about 2.4 million barrels per day. Solutions for power restoration are being actively pursued, and we should have additional information on this process in the next situation report.

* Plantation is now operating at 25% of capacity and hopes to be up to 50% of normal operations by Friday

* Capline, a crude oil pipeline serving the Midwest, is planning to restart operations in the next day or two. Power has been restored to almost every pumping station. Capline plans to restart this evening and has sufficient supply at St. James Terminal to run at reduced rates for three days.

* Gulf Coast refiners dependent upon sour crude supplies (Mars and Poseidon) will not be able to obtain new supplies as long as the production platforms remain closed.

* The following table displays refineries located in states impacted by Hurricane Katrina:
See page 3 here for the tables

Finally, just an observation.....according to CNBC, crude is down slightly (14 cents/bbl @ 11:20AM) while gasoline is up again (over 17 cents/gal). Bloomberg reports heating oil is up over 5 cents/gal as of 10:30AM. I would guess that we're seeing jet fuel prices equivalent to something close to $80/bbl oil.

Jim

 

[jimntx]

Interestingly enough, on the NYMEX, oil futures are actually down a few cents right now. Only February and March contracts are at or above $70/bbl and that's $70.50/bbl.

 

[cltflyguy]

Im glad you condense this information for us here.. its good stuff.

On a worse note, Im hearing rumors about gasoline shortages in the south, namably Atlanta, and Charlotte.. Can any one confirm?

I've read on other message boards people waiting in line for hours, and gas stations shutting down early. Some employeers letting workers out early to get gas..

[post="295358"][/post]​

Charlotte just did a live report about gas and other issues. Rumored was that charlotte would be without gas for atleast two weeks. NOT TRUE. They said charlotte would continue to have gas although supply would be lower untill both
pipes are back up to full capacity. As of this morning...the two pipe lines that provide north carolina was at 25% and the other was at 50% and shoud increase by the weekend providing more fuel. Because of the rumor people were going crazy last night getting gas. There were alittle over 40 gas stations out of gas this morning out of 280 that are in charlotte. They said trucks would be refilling most of them today. There were places in atlanta yesterday charging $6.00 for gas. Thats been on the news here also!

 

[BoeingBoy]

The latest numbers for crude facilities and production from MMS, which oversees drilling on the outer continental shelf portion of the Gulf.....

423 of 819 manned platforms remain evacuated (52% vs 59% yesterday)

64 of 137 rigs remain evacuated (48% vs 59% yesterday)

Lost production was 1,356,498 bbls/day (91% of capacity vs 95% yesterday)

Total lost production since 8/26/05 is 7,441,566 bbls or 1.36% of annual Gulf production.

Jim

 

[diogenes]

Hi, Jim

Thanks for keeping us up-to-date.

Question?

Last night CNN said the national average was 2.65 for a gallon of gas, BUT places in Atlanta were selling for $6.

Would that be gouging?

 

[BoeingBoy]

Boy, that'd be above my pay grade, Dio. Sure seems hard to justify that retail price based on the spot price, but the legal technicalities of when charging what the market will bear for a product in short supply (or at least perceived that way) crosses the line into gouging is beyond me....

Paid $3.30 locally (GSO area) today for regular - just glad I can make two trips to CLT per tankfull with my little old Honda.

Jim

 

[767jetz]

Would that be gouging?

[post="295655"][/post]​

Ya think?????

But seriously, if airlines would just pass the cost of fuel along to consumers, like most other industries, this whole issue would disappear.

No other industry that I know of (except maybe the auto industry) do companies price their product below what it costs to produce.

I know I'm preaching to the choir, but it's so frustrating. Looks like UA and DL are increasing fares, and hopefully others will follow.

As energy costs continue to rise, and consumers spend less to make ends meet since everything costs more to produce, this economy will slow and possibly slip into recession. Not a good thing for anyone, but that is an issue for our lawmakers and policy makers.

Bottom line is that it looks like airlines are becoming more willing to raise prices, and should continue to do so. Now that labor costs have shrunck to historic lows, it's time to pass the cost of doing business on to the consumer.