Lack of rain is hurting Panama Canal shipments
November 15, 2023
Today we get the EIA weekly reports for last week when they were on maintenance and this week. These are the reports for the weeks ending November 6 and November 10. The average estimate for today’s report is crude up 4.291 million barrels, gasoline up 1.058 million barrels, and distillates down 740,000 barrels.
The API data was out yesterday afternoon and it called crude oil up 1.34 million barrels, gasoline up 195,000 barrels. and distillates down 1.02 million barrels.
The average estimates for today’s propane inventory updates are to see an inventory decline of 636,000 barrels for the week ending November 3 and a decline of 579,000 barrels for the week ending November 10.
The Panama Canal is being hurt by a lack of rainfall and October was the driest since records for the country began in 1950. According to Bloomberg by February just 18 ships a day will be crossing the route about half as many as there were a year earlier. While that’s a problem for virtually every commodity and manufactured product it is particularly acute for energy. Last year, by weight, almost half the volume of goods shipped through the canal’s locks was oil and gas-based products. This is particularly pertinent at a time when the US is exporting more propane than ever before.
The EIA says there are 10 new projects in North America that will double LNG export capacity within 4 years. The continent currently has 11.4Bcf/d of capacity and that will rise to 24.3 Bcf/day by the end of 2027. The new export capacity will allow for the production of more natural gas which will increase propane supply. Of course, propane supplies from the US already exceed US domestic demand significantly so there are new propane/NGL projects for processing and exporting in the works as well.
WTI crude settled above its 200-day moving average and looked set to trade higher. It did run higher but ran into resistance at $80 and pulled back. For now, the market is stuck in that range of support at $78.17 and resistance at $80. Eventually it will have to break, and it might require some event to give it a push and that could be in either direction.