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The Energy Report: Summer Draws Makes Me Feel Fine

Published 06/21/2024, 09:10 AM

Summer draws, makes me feel fine, Blowing through the jasmine in my mind. Ok I thought it was “jazz man” in my mind, but no matter, because on the first day of summer and the oil market is simmering. It is also a sign that consumers might be feeling a bit better about their circumstances and are trying to enjoy the summer breezes. Not only did we get a report from the Energy Information Administration (EIA) that demand for gasoline hit the highest level of the year, but the price of oil has risen 5% this month, hitting its highest price since April on better demand.

Predictions that gas prices would continue to fall seems to be at risk, and a drop in diesel supply is suggesting that the US industrial sector is heating up. Crazy strong demand numbers for ‘other oils’ is lifting overall oil demand expectations and signaling future tightening of oil and product supply in the coming weeks. This comes as the US Oil and Gas Association has a classic calling out of Biden on his fossil fuel hypocrisy.

But before we get to that let’s talk about the sudden resurgence of US oil and gasoline demand. Drivers that have been reluctant to get on the road party being held back from the plague of inflation, started to venture out as demand rose by 346,000 barrels a day last week to a new year high of 9.386 million barrels a day. Still, the four-week moving average shows that overall gas demand is still 1% below a year ago.

US gasoline exports to Europe are soaring. Quantum (NASDAQ:QMCO) Energy points out that European exporters will have drawn further support from a sharp fall on the Atlantic coast, where stocks fell 2.7 million barrels or 4.5%.

Diesel demand also increased from 328,000 barrels a day to 3,977. That seems to reflect data of stronger US manufacturing and Farmer's fieldwork.

Also, the demand for those often-forgotten other oils surged from a million barrels a day by 1.138 million barrels a day to 5009 million barrels a day. Other oils like aviation gasoline, kerosene, natural gas plant liquids and LRGs (except propane/propylene), unfinished oils, other hydrocarbons and oxygenates (except fuel ethanol), aviation gasoline blending components, naphtha and other oils for petrochemical feedstock use, special naphthas, lube oils, waxes, coke, asphalt, road oil, and miscellaneous oils and other fun stuff like that.

That led to draws across the board as EIA reported that “U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.5 million barrels from the previous week. At 457.1 million barrels, US crude oil inventories are about 4% below the five-year average for this time of year.

Total motor gasoline inventories decreased by 2.3 million barrels from last week and are about 1% below the five-year average for this time of year. Distillate fuel inventories decreased by 1.7 million barrels last week and are about 8% below the five-year average for this time of year.

Still John Kemp says, “US Crude oil inventories remain very close to the long-term seasonal average, despite talk of a massive deficit in the global market. Stocks were just -2 million barrels below the prior ten-year seasonal average on June 14 compared with a surplus of +15 million barrels at the same point in 2023.

Of course, then you must remember the depleted Strategic Petroleum Reserve that gives that a different look. And while the SPR rarely was tapped, having that in reserve gave oil prices a sense of security and a lower risk premium.

Biden is no doubt the most anti-fossil fuel President in history and has slandered and shown disrespect to the US oil and gas industry and its workers despite the fact that the US oil and gas industry is one of the main reasons that the US economy is as strong as it is and serves the American people in many ways that cannot be replaced.

So, when Biden posted a picture of himself walking down the stairs of Air Force One with the caption “The best part of my job is showing up for the American people” The US Oil and Gas Association wanted to point something out to him. They wrote under the Biden’s post that, “Air Force One – two specially configured 747-200Bs are powered by four GE CF6-80C2B1 engines with a thrust rating of 56,700 pounds each.

The fuel capacity of Air Force One is 53,611 gallons of jet fuel which is primarily derived from crude oil – which is produced domestically – thanks to the US oil & gas industry. So – every time POTUS “shows up” – showing up is made possible – by the members of the US Oil & Gas Association. And he has never once said thank you….”

Well, I know Biden might not thank you, but I thank you! In fact, many Americans who benefit from your investment and innovation, hard work, and risk-taking to make our world safe, and drive our economy and the lives that you are saving today by keeping our homes cool during this heat wave, thank you as well. Keep the Faith.

Natural gas is pulling back as the market thinks that Tropical Storm Alberton will cool off demand. Today we got the EIA Nat gas report at 10,30 Eastern time. Anthony Harrup at the Wall Street Journal wrote that U.S. natural gas inventories likely saw a below-average build last week, further reducing surplus supplies as hot weather across much of the U.S. lifted demand for air conditioning.

Natural gas in underground storage is forecast to have increased by 70 billion cubic feet to 3,044 Bcf in the week ended June 14, according to the average estimate in a Wall Street Journal survey of nine analysts, brokers and traders. Estimates range from an injection of 64 Bcf to an injection of 82 Bcf.

It would be smaller than the five-year average injection for the week of 83 Bcf, and mark a sixth consecutive below-average injection, lowering the surplus over the five-year average from 573 Bcf the week before.

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