U.S. crude oil production continues to set monthly record highs (7/31/2019)

U.S. crude oil production in each of the first five months of 2019 showed increases over their 2018 levels, with April 2019 establishing a new monthly record. Production grew the most in the Permian region and the U.S. Federal Gulf of Mexico (GOM). The U.S. Energy Information Administration (EIA) initially expected the decline in crude oil prices between October and December 2018 to slow U.S. crude oil production growth for the first half of 2019. However, several factors have contributed to increases in the U.S. production forecast. First, crude oil prices began rising in early 2019, partially offsetting the price drop seen at the end of 2018. In addition, crude oil prices in Midland, Texas (which reflect crude oil prices in the Permian region), rose faster than the U.S. benchmark West Texas Intermediate (WTI), which is priced in Cushing, Oklahoma (a major storage and distribution hub). As a result, the price spread between Midland and Cushing narrowed, allowing producers in the Permian region to receive relatively better prices. Several projects have also come online in the GOM this year, boosting production. EIA forecasts U.S. production will grow through 2020, but anticipates growth will slow in 2020 as crude oil prices flatten. ... More »

U.S. oil producers increase shareholder distributions (7/24/2019)

First-quarter 2019 results for 43 U.S. oil producers indicate they have increased shareholder distributions through dividends and share repurchases during the past two years, averaging 28% of cash from operations since the beginning of 2018. As the overall level of net income, or after-tax profits, increased for this set of companies in recent quarters, many of them increased both shareholder distributions and capital expenditures. Oil price declines since the second quarter of 2019, however, could reduce revenue and cash from operations going forward. This analysis is based on the published financial reports of these 43 companies and does not necessarily represent the financial situation of private companies that do not publish financial reports. ... More »

The crude oil adjustment accounts for differences in supply and disposition (7/17/2019)

The U.S. Energy Information Administration’s (EIA) Weekly Petroleum Status Report (WPSR) provides weekly estimates of U.S. crude oil supply, including a measure of how well the supply of crude oil and the disposition of crude oil balance with each other. This measure—referred to as the adjustment—is a derived term equal to the difference between supply and disposition. If the reported supply and disposition of crude oil balanced perfectly each week, the adjustment would equal zero. For several reasons, however, this is rarely the case. ... More »

Crude oil prices are forecast to remain relatively flat (7/10/2019)

In the July 2019 update of its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that Brent crude oil prices will average $67 per barrel (b) in 2019 and in 2020. EIA expects that West Texas Intermediate (WTI) crude oil prices will average $60/b in 2019 and $63/b in 2020 (Figure 1). The forecast of relatively stable crude oil prices in the mid-$60/b range reflects EIA’s expectation that heading into 2020, global oil consumption will grow at a similar rate as global oil supply at current price levels. However, several risks to both consumption and supply could push prices out of this range. ... More »

Planned shutdown of Philadelphia refinery will change gasoline and diesel supply patterns for the U.S. East Coast (7/3/2019)

On Friday, June 21, the Philadelphia Energy Solutions (PES) 335,000 barrels per day (b/d) refinery in South Philadelphia experienced a major fire and explosion. The resulting damage to the refinery and preexisting financial strains led PES to announce its intention to shut down operations at the refinery. The closure of the Philadelphia refinery would decrease the number of operating East Coast refineries to seven and total operating capacity to 889,000 b/d (Figure 1). The U.S. Energy Information Administration (EIA) estimates closing the Philadelphia refinery would reduce East Coast gasoline supplies by approximately 160,000 b/d and distillate supplies by approximately 100,000 b/d. The potential shutdown of the largest refinery by capacity on the U.S. East Coast is likely to reconfigure petroleum product supply chains in the Central Atlantic. ... More »