New From PetroChem Wire . . . .

NGLs Week

NGLs Week Newsletter  

PetroChem Wire and Genscape have partnered to create NGLs Week, a comprehensive summary of price trends, upstream and downstream costs, operations news and supply/demand forecasts. The report contains everything you'll need to understand what's happening in the NGL markets.

For more information, click here.

ANALYSIS: As crude supplies rise, so do prices in 'counter-intuitive' move

HOUSTON, April 28, 2016 (PCW) Wednesday’s inventories again showed a build in crude stocks – to record levels – yet the market shrugged it off and went up anyway. Front month WTI finished up $1.29/bbl at $45.33/bbl; that is up $8.57/bbl since January 4.

While that may seem strange, the attendant graph shows that over the past weeks that has been the trend: as stocks increase, prices go higher.

“It is counter-intuitive” allowed one market source.

Wednesday is a case in point. The inventories were released at 9:30 am CDT and showed increases in crude and gasoline stocks. The market initially reacted tepidly: crude was up 14 cents and gasoline fell just under a penny.

The market shot higher after the Federal Reserve concluded a meeting and indicated that it was not likely to raise interest rates.

API Curve Ball

Also, one curve ball the market was thrown was the American Petroleum Institute statistics released Tuesday afternoon, which showed a 1.1 million barrel decrease in crude stocks. The EIA showed a 2 million barrel increase.

Those factors certainly gave the market a boost, but does not explain the rise in stocks and prices over past weeks.

One reason offered by market sources is the EIA overall petroleum demand number (averaging over four weeks), 20 million b/d, for the week ending April 22, a 4% increase on the year. “Whatever you think about the economy, people are driving more,” suggested one market source.

In fact the EIA showed gasoline demand at 9.4 million b/d for the week ended April 22 (four week average); that is about 500,000 b/d higher than the same period last year.

In fact the EIA showed gasoline demand at 9.4 million b/d for the week ended April 22 (four week average); that is about 500,000 b/d higher than the same period last year.

The other factor seen was domestic crude oil production, which continued to fall. The EIA showed production at 8.938 million b/d, down 435,000 b/d on the year.

“I think the market is saying that at some point those lines have to cross,” said one market participant. “Increased demand is going to come up against falling production.” -- Robert Sharp

Sign Up for RSS Feed  follow us in feedly