The Oil Drum | In the beginning of the fourth quarter

In the beginning of the fourth quarter

Posted by Heading Out on November 3, 2005 - 1:07am

A couple of weeks ago I heard the EIA presentation in which they anticipated that, by the end of the year, demand would have increased around 1.3 mbd. Looking at the figures for the end of October (the first month of the 4th Quarter where demand is historically greatest) one sees that this prediction may well become true, at least the US is moving back in that direction.

Although the four-week averages of the gasoline demand show that demand is still approaching last year's, the weekly number has now passed 9 mbd, above last year.

However, as the import numbers suggest, taking individual weekly data by itself can be a mistake, since over the past week imports have turned back up by 200,000 bd after dipping down, and so are still that half-a-million above normal.

. At present the volume in stocks seems to remain fairly steady at the average of the past few years volume.

With distillate we also appear, at present to be in good shape, with demand still running about the same as last year now, averaging the numbers over the last couple of weeks.

and with production beginning to rise

so that it is now about the same as last year, as is the current level of imports and stocks are a little ahead of last year.

So this week's news is perhaps at first that there isn't any. However, Platts reports that DoE is anticipating stronger imports from Asia.

The US Department of Energy expects there to be strong imports into the country this coming winter from around the world, but most notably from Asia, Deputy Assistant Secretary Mark Maddox told a House panel Wednesday.
In prepared remarks for presentation to the Energy and Commerce Committee, Maddox noted that, "based on our conversation with industry, we expect that distillates will continue to enter into the US from all over the world, but especially from Asia."

Given that Platts is also quoting Exxon Mobil that the Chalmette refinery is initiating start-up procedures which is ahead of the quoted start-up that we had a reference to yesterday, at present the news would appear to be good.

In the beginning of the fourth quarter

PDF version

18 comments

Oil Trader on November 3, 2005 - 2:37am Permalink | Comments top

It would appear that all is well but if you subtract the IEA's SPR release's the numbers would look scary. Also Japan allowed there refinerys to run down their stocks (they are required to hold 45 days worth of stock I think (its off the top of my head)) This being the case I dont see how Asia is going to come to the rescue and even if they do they have to get the crude from some where. Japans crude imports where down 6.5% on last month this dosent bode well for their product export. China's demand is still growing not as fast as last year but the trend is still up.

IMO this winter oils price is going to depend on how cold and how long it lasts. If it doesent spike this year there is always next.

westexas on November 3, 2005 - 8:11am Permalink | Parent | Comments top

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/10/23/nfuel23.xml&sSheet=/news/2005/10 /23/ixhome.html

(If it's cold in the U.K., they may go to three day workweeks.)

http://www.fcnp.com/534/peakoil.htm

(I hadn't thought about it, but because of the hurricanes, the U.S. is currently getting 80% of its oil supply from imports and the SPR.)

wigz on November 3, 2005 - 10:38am Permalink | Comments top

Can someone please explain-
Diesel fuel costs vs. Gasoline.
My simple warped mind sees the transpo trucking costs
increases ....explained falsely as inflationary to
general public (consumer is paying). And the lower
personal vehicle (your car)fuel falling....so as to
insure employment.I'm so happy!!!
or in perhaps a more direct way of expressing
my thought...
Stuff at Wal-mart is going up (diesel)
I pay more so profit margins can (in theory?) exist.
I bitch, am pinched, lower gasoline (relief) I can
still afford to go to work, retain a baby sitter,
start buying 40 watt bulbs...and a case of suds.
Now everyone is happy.
Retailer, consumer and the man behind the curtain.
WHAT AN EXPERIMENT ?
Techno answers please,
refineries, demand destruction etc terrrra...
import availability...
I suspect a clever manipulation. So evil.
Curiously after hurricane RITA and the additional
losses of the infrastructure prices barely spiked
budged ...noda...in fact embarked a steady fall.
VERY CURIOUS.
You see here in my neck of the woods this I observed
Southern Michigan,
Explain ...
Please,
commodity markets ??? Ha,
Silver manipulation ???
Can I say THIN ?
A fiat system controlled by a few .
I gotta stop now.
My beak is getting tired
I've pecked long enough.
Think small, think fast, peace
Male pattern baldness = which hand I use
to scratch my head !

LevinK on November 3, 2005 - 12:23pm Permalink | Parent | Comments top

LOL better get rid of the "this is a plot" thinking as soon as possible.

The common explanation of diesel prices rising more compared to gas is that while you can cut one trip or buy a Prius when gas rises, a truck driver can not say "LOL diesel is expansive today, I will not drive to that KMart I'll take the bus instead".

spooky on November 3, 2005 - 3:18pm Permalink | Comments top

I wonder how much diesel is being used to fix all the Katrina/Rita/Wilma damaged stuff? I mean, this is probably a respectable amount of daily fuel use....just a thought.

steverino on November 3, 2005 - 3:33pm Permalink | Comments top

the distillate production chart shows a crashing of production from september until recently. this would account for the higher price of diesel...i believe that producers were arm twisted to up gasoline production at the cost of distillate production to quiet the angry voters..aren't you calm now?

wigz on November 3, 2005 - 5:56pm Permalink | Parent | Comments top

sigh... makes absolutely know sense to sacrifice the backbone of the economy. Where is the sense of balance. Who orders the products from the exporters?
There is a reason for everything, be it Adam Smith, John Smith or Smitty Smith.
And I know that my official sh@t sandwich is plotted
on a chart using officialy charted sh@t.
And the 64 k ? who sets [prices] .
I do by trading the futures market?
I don't believe it.
18 billion $'s worth of contracts maybe.
Who's got that little bit of scratch.
The same fella gettin da Bird flu medicine for ya?
yikes.
lol is that lots of luck?

alan on November 3, 2005 - 4:09pm Permalink | Comments top

Correct me if I'm wrong but I believe they make deisel from a heavier part of the crude oil than gasoline. So diesel production would compete with the fuel oil production needed for the winter while gasoline would not.

Typhoon on November 3, 2005 - 5:40pm Permalink | Parent | Comments top

Catalyic cracking allows for some of the heavier fractions to be made into gasoline. Therefore, heating oil production competes with diesel, jet fuel, AND gasoline production.

Typhoon on November 3, 2005 - 5:40pm Permalink | Parent | Comments top

Sorry for spelling "catalytic" incorrectly. I was typing way too quickly.

patents on November 3, 2005 - 6:31pm Permalink | Comments top

Once again I apologize for my lack of understanding - NEVERTHELESS

Once again the weekly charts show that for the last week, demand was higher last week than a year ago. I know that everyone always says that one should look at the four week average, but the weekly data is still talking a great deal. What it is saying loud and clear (to me) is that the concept of demand destruction is fictitious. Prices during this whole period have apparently not affectyed demand except for the specific week or two of the huricanes.

Also, being a conspiracy theorist, I note that on the multi-line chart showing demand that the information for last year is not shown (either weekly data or the 4 week average). I believe that this ommission is deceptive and probably intentionally so.

Nor can I believe that world wide demand is very much different from last year.

Considering that GOM crude production is still substantially shut in, and demand numbers being unchanged from last year, there is something that does not add up unless the withdrawals from the Strategic Reserve is being used to inflate the numbers. Is the administration now just giving this crude to their cronies or is there really a lien on behalf of the people of the US against future production?

Despite all of this, why is gasoline prices well below the cost before the huricanes? Is this irrational exuberance or just manipulation to prevent the imposition of windfall profit taxes?

Halfin on November 7, 2005 - 3:02am Permalink | Parent | Comments top

It's true that demand is edging up, but that's because prices are falling back down. Look at http://www.newjerseygasprices.com/retail_price_chart.aspx (you have to mess with it a little to get a U.S. chart) and what you see is that prices have been dropping all last month. They're now like $2.35, way down from the $3 gas that we saw post Katrina. So, let's see, gas prices rose and demand fell. Gas prices fell and demand rose. Who can claim that this comes as a big surprise? It's exactly what is predicted by standard economic theory. The next question is, why is gas so cheap? It comes down to supply and demand. Demand is no longer being suppressed, so this means that there must be ample supply. Probably we are still seeing some benefits from the immediate post-Katrina steps taken to address gasoline shortages. Those kinds of plans always take a while to kick in and last a little longer than they are needed. We are getting a benefit from that right now. And then the next question is, will gas stay cheap (i.e. well below $3)? My guess is that it will stay reasonable until we approach next summer's driving season. If the economy stays strong we will probably see gas prices go up around then. But that's not a very daring prediction, this is the regular pattern in recent years.

fireangel on November 3, 2005 - 7:02pm Permalink | Comments top

Can anyone please tell me why the 4 week product supplied avergae here

http://tonto.eia.doe.gov/dnav/pet/hist/wrpupus24.htm

is different from the 4 week product supplied average here

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/curren t/txt/wpsr.txt

I think this is very important because one shows demand running 2% above last year and the other shows it running 1.7% below last year.

Biologyfool on November 3, 2005 - 8:41pm Permalink | Parent | Comments top

Uhmm, the first one says 20,481 thousand barrels per day.

The second one says "Total product supplied over the last four-week period has averaged nearly 20.5 million barrels per day."

Sounds about the same to me.

fireangel on November 4, 2005 - 1:08am Permalink | Comments top

I am refrring to the amount for 2004 not 2005.

Biologyfool on November 4, 2005 - 12:24pm Permalink | Parent | Comments top

Got it. The difference is in the end dates 10/29/04-20,391 vs 10/28/04-20,849. So the logical conclusion is that we made very little products on 10/29/04 or we made a hell of a lot on 10/1/04.

I agree, very weird, have to tried e-mailing them?

From their contact page:
Weekly Petroleum Status Report Larry Alverson 202-586-9664 larry.alverson@eia.doe.gov

If you don't want to, I will, you've peaked my curiosity.

GreyZone on November 4, 2005 - 1:26pm Permalink | Parent | Comments top

My guess, based on experience with other government programs, is that there are reporting dates on which data is due to the agency in question. The agency then doesn't mark the data as to the date it was actually produced but rather to the date it was reported. Thus, there may be a rush of information on or near a report date that looks like a sudden spike but is not really a spike.

fireangel on November 6, 2005 - 2:44am Permalink | Comments top

Thanks for the contact information.I will email them. I have been notcing this for multiple weeks. So a single day with extraordinary product supplied (or not supplied) does not explain it. Can you imagine the oil markets reaction if 2004 demand as shown in latter link was reported. Demand running 2% above last year. We would have full blown panic.
I will email them and let you know what they say.
Thanks again.