Extreme Cold and Refinery Damage Puts a Pinch on Supplies
March 3, 2021
The API inventory report said that crude oil stocks rose by 7.4 million barrels. The Reuters estimates for today’s DOE inventory report are for crude stocks to be down 928,000 barrels. Gasoline stock in the API report were down 9.9 million barrels, compared with analysts’ expectations for a draw of 2.3 million barrels. Distillate stocks were down 9.1 million barrels and today they are calling for a draw of 3 million barrels.
The market is fluctuating on OPEC+ headlines. A headline comes out that OPEC+ will increase production and the market sells off. The next headline says they may stay the course and the market rallies. The market is likely to be in this mode until the market gets a clearer signal from OPEC+, which might be difficult as OPEC+ will play the game of trying to support prices but not make it seem that way. Also, the overall feeling is that this market regardless of what OPEC + does in headed for supply tightness as we move into the back half of the year. Demand is coming as the weather improves, as more stimulus arrives, as more vaccines roll out and the COVID-19 numbers get better. On that front, President Biden announced at a press conference yesterday that the US will have enough Covid-19 shots by the end of May to vaccinate all adults. Demand is coming as all of us are tired of being in this situation and are ready to do something. Many analyst are predicting a very robust vacation season with more people driving somewhere just to get out.
The extreme cold temperatures and the damage it has done to refineries has put a pinch on supplies. Refineries are coming back but is has been slower than most thought. This fact has cause basis values to move higher adding to the rally in prices. With more demand coming and spring activities getting closer every day, now is the time to prepare for those activities. Take stock of your current inventory and plan accordingly. We are still working our way out of the crazy propane situation we all went through with the extreme cold weather so plan now for strong spring demand for fuel.
The average estimate for today’s propane inventory update is for there to be a draw of 2.3 million barrels with the five year average for this week being a 1.283 million barrel draw.