US oil data from the US Energy Information Administration for the week ending December 16th indicated that after a big drop in our oil imports and a big decrease in ​those mysterious ​oil supplies that could not be accounted for, we needed to pull oil out of our stored commercial crude supplies for the 5th time in 6 weeks, and for the 16th time in the past 35 weeks, despite another sizable release of oil from the SPR.  Our imports of crude oil fell by an average of 1,048,000 barrels per day to average 5,819,000 barrels per day, after rising by an average of 855,000 barrels per day during the prior week, while our exports of crude oil rose by 44,000 barrels per day to average 4,360,000 barrels per day, which together meant that the net of our trade in oil worked out to an import average of 1,459,000 barrels of oil per day during the week ending December 16th, 1,092,000 fewer barrels per day than the net of our imports minus our exports during the prior week.  Over the same period, production of crude from US wells was reportedly unchanged at 12,100,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 13,559,000 barrels per day during the December 16th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,976,000 barrels of crude per day during the week ending December 16th, an average of 150,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 1,363,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US.  So, based on that reported & estimated data, the crude oil figures from the EIA for the week ending December 16th appears to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 1,054,000 barrels per day less than what our oil refineries reported they used during the week. To account for that ​obvious ​disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+1,054,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed. Moreover, since last week’s  “unaccounted for crude oil” was at a record (+2,259,000) barrels per day, that means there was a 1,204,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering those comparisons virtually meaningless....​​ However, since most everyone treats these weekly EIA reports as gospel, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week's 1,363,000 barrel per day decrease in our overall crude oil inventories left our oil supplies at 796,858,000 barrels at the end of the week, which was our lowest total oil inventory level since January 17th, 1986, and therefore at a new 36 1/2 year low....Our oil inventories decreased this week as an average of 842,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 521,000 more barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. That draw on the SPR was an extension of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was originally intended to supply 1,000,000 barrels of oil per day to commercial interests over a six month period from its inception to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising over that time.  The SPR withdrawals under that program ​began fluctuating ​during the summer because the administration ha​d also been attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis.  Furthermore, Biden recently announced another 15,000,000 barrel release from the Strategic Petroleum Reserve to run thru December, while simultaneously announcing he'd buy crude to replenish the SPR if oil prices fall to or below the $67-72 a barrel range, effectively putting a floor under oil at that price.  Friday of this past week the administration announced an initial token purchase of three million barrels under that plan, for oil to be delivered back to the SPR in February.  Including the administration's initial 50,000,000 million barrel SPR release earlier this year, their subsequent 30,000,000 barrel release, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 277,523,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 29 months, and as a result the 378,624,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since December 30th, 1983, or nearly ​at ​a 39 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases. The total 180,000,000 barrel drawdown of the​ current​ ​Biden release program, still scheduled to run through December, will ​have released almost a third of what remained in the SPR when the program started, and leave​ us with what ​is less than a 20 day supply of oil at the current consumption rate as we head into the new year.

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,184,000 barrels per day last week, which was 4.0% less than the 6,442,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at 12,100,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,700,000 barrels per day, while Alaska’s oil production was 6,000 barrels per day lower at 450,000 barrels per day but had no impact on the rounded national total.  US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 7.6% below that of our pre-pandemic production peak, but was 24.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.

US oil refineries were operating at 90.2% of their capacity while using those 15,976,000 barrels of crude per day during the week ending December 16th, down from their 92.2% utilization rate during the prior week, a fairly normal utilization rate for mid December.  The 15,976,000 barrels per day of oil that were refined this week were still 1.0% more than the 15,818,000 barrels of crude that were being processed daily during week ending December 17th of 2021, while 5.9% less than the 16,980,000 barrels that were being refined during the prepandemic week ending December 20th, 2019, when our refinery utilization was at 93.3%, as refinery utilization typically rises in late December ...

Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was quite a bit higher, increasing by 358,000 barrels per day to 9,552,000 barrels per day during the week ending December 16th, after our gasoline output had increased by 129,000 barrels per day during the prior week. This week’s gasoline production was still 3.9% less than the 9,942,000 barrels of gasoline that were being produced daily over the same week of last year, and 7.0% below the gasoline production of 10,269,000 barrels per day during the prepandemic week ending December 20th, 2019.  On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 66,000 barrels per day to 5,102,000 barrels per day, after our distillates output had decreased by 164,000 barrels per day during the prior week.  But even with those decreases, our distillates output was still 5.2% more than the 4,852,000 barrels of distillates that were being produced daily during the week ending December 17th of 2021, while 6.3% less than the 5,444,000 barrels of distillates that were being produced daily during the week ending December 20th 2019...

With the increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 6th week in a row and for the 9th time in 19 weeks, increasing by 2,530,000 barrels to 213,768,000 barrels during the week ending December 16th, after our gasoline inventories had increased by 4,496,000 barrels during the prior week. Our gasoline supplies rose by less this week because the amount of gasoline supplied to US users rose by 459,000 barrels per day to 8,714,000 barrels per day, while our exports of gasoline fell by 316,000 barrels per day to 887,000 barrels per day, and while our imports of gasoline fell by 239,000 barrels per day to 551,000 barrels per day.   After 6 consecutive gasoline inventory increases, our gasoline supplies were 0.9% more than last December 17th's gasoline inventories of 224,118,000 barrels, but still about 2% below the five year average of our gasoline supplies for this time of the year…

With the decrease in our distillates production, our supplies of distillate fuels decreased for the 1st time in 6 weeks, and for the 27th time over the past year, falling by 242,000 barrels to 119,929,000 barrels during the week ending December 16th, after our distillates supplies had increased by 1,364,000 barrels during the prior week. Our distillates supplies also fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 247,000 barrels per day to 4,015,000 barrels per day, and because our imports of distillates fell by 99,000 barrels per day to 188,000 barrels per day, while our exports of distillates fell by 173,000 barrels per day to 1,310,000 barrels per day... After fifty-two inventory withdrawals over the past eighty-six weeks, our distillate supplies at the end of the week were were still 3.4% below the 124,154,000 barrels of distillates that we had in storage on December 17th of 2021, and about 7% below the five year average of distillates inventories for this time of the year...

Meanwhile, after a big drop in our oil imports and a big drop in our “unaccounted for crude oil”, our commercial supplies of crude oil in storage fell for the 12th time in 19 weeks and for the 31st time in the past year, decreasing by 5,895,000 barrels over the week, from 424,129,000 barrels on December 9th to 418,234,000 barrels on December 16th, after our commercial crude supplies had increased by 10,231,000 barrels over the prior week. After this week's decrease, our commercial crude oil inventories slipped to around 7% below the most recent five-year average of crude oil supplies for this time of year, but were still around 24% more than the average of our crude oil stocks as of the third weekend of December over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And after our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this December 16th were 1.3% less than the 423,571,000 barrels of oil we had in commercial storage on December 17th of 2021, and 16.3% less than the 499,534,000 barrels of oil that we had in storage on December 18th of 2020, and 5.2% less than the 441,359,000 barrels of oil we had in commercial storage on December 20th of 2019…

Finally, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows over the most recent months, we are also continuing to watch the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR.  After the big crude decreases we've already noted for this week, the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 15,203,000 barrels this week, from 1,613,439,000 barrels on December 9th to 1,598,236,000 barrels on December 16th, after our total inventories had increased by 9,231,000 barrels during the prior week. This week's decrease left our total petroleum liquids inventories down by 190,197,000 barrels over the first 50 weeks of this year, and at the lowest since June 11th, 2004, or at a new 18 1/2 year low..

note: the above was excerpted from my weekly blog post at Focus on Fracking