Crude’s got the blues once more

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One hundred and thirty-one years after the birth of the mighty Jelly Roll Morton, the crude complex has got the blues once more. Prices are moving lower today, led by gasoline as the Colonial pipeline panic eases, and as the ebb and flow of OPEC expectations wane once more – after wax-on action yesterday. Hark, here are six things to consider in crude oil and natural gas markets today:

1) The current situation in the U.S. gasoline market caused by the Colonial pipeline spill has been described by our fearless leader (Abudi Zein) as ‘pushing down on a balloon’: as one side is pressured lower, the other side swells up. This is exactly what is underway regarding regional gasoline supply and inventory.

East Coast gasoline stocks are being drawn down strongly amid a starvation of supply, while at the other end of the pipe, inventories on the Gulf Coast are swelling, as gasoline is stranded.

US_gasoline_exports_sept.jpgGasoline imports into the East Coast last week were helped by a rebound in flows from both Northwest and Southern Europe, but a lack of cargoes from Canada mean there will be no blowout in terms of total imports from tomorrow’s weekly EIA inventory report. 

As for the flip-side, Gulf Coast gasoline exports have been averaging around 700,000 barrels per day in the past few months, as exhibited by our ClipperData (hark, right). Nearly forty percent of these exports head to Mexico, while Latin America as a whole takes the overwhelming majority – with Venezuela, Colombia, Panama and Brazil the leading recipients.

2) If Abudi Zein is the Oracle of Oil (he is), then Eric Rosenfeldt (@energyrosen) is the Guru of Gasoline. Via the Wall Street Journal today, he expects fuel-supply problems in the Southeast to last for five or six weeks. Even once the Colonial pipeline is repaired ‘you have to replenish everything at the retail level and everything at the wholesale level, and that’s a significant amount of barrels.’

3) The latest JODI data show Saudi crude exports for July were at 7.5mn bpd. Our ClipperData show crude loadings have held at this level for August, and are currently at the same pace thus far in September.

We discussed recently how the start up of a new gas development, Wasit, in Saudi Arabia has boosted domestic natural gas production and crimped the need for the direct burn of crude by