U.S. average gasoline prices this week are similar to the previous two Thanksgivings (11/27/2019)

As U.S. households prepare for Thanksgiving and the holiday travel season, gasoline prices are similar to those in recent years. As of Monday, November 25, regular retail gasoline prices averaged $2.58 per gallon (gal) nationwide, similar to the $2.61/gal average on the Monday before Thanksgiving in 2018 and the $2.57/gal average in 2017. ... More »

EIA increases U.S. crude oil production forecast (11/20/2019)

The U.S. Energy Information Administration (EIA) revises the U.S. crude oil production forecast it publishes in each Short-Term Energy Outlook (STEO) based mainly on two factors: updates to EIA’s published historical data and EIA’s crude oil price forecast. In the November 2019 STEO, EIA increased its forecast of U.S. crude oil production in 2019 by 30,000 barrels per day (b/d) (0.2%) from the October STEO. EIA increased its 2020 crude oil production forecast by 119,000 b/d (0.9%) compared with the October STEO. The increases in crude oil production forecast in the November STEO were primarily driven. ... More »

Low distillate inventories contribute to higher heating oil price forecast (11/14/2019)

Distillate inventories in the Northeast United States (Petroleum Administration for Defense Districts, or PADDs, 1A and 1B), which include heating oil, were 24.4 million barrels on November 8, 37% below the below their previous five year (2014–18) average (Figure 1). Northeast distillate inventories remained below the previous five-year average every week this year, but remained within the previous five-year range until late-September when inventories in the Northeast fell below this range. Customers in the Northeast rely on heating oil more than in any other region; about 20% of households in this region use heating oil for space heating. Pricing dynamics in distillate futures are currently consistent with low inventory levels. The U.S Energy Information Administration (EIA) believes that heating oil prices will likely increase and revised its heating oil price forecast up in the November Short-Term Energy Outlook (STEO) to reflect the current supply tightness in the Northeast. ... More »

Changing nature of non-OPEC supply types may be affecting the crude oil futures market (11/6/2019)

Changes in the oil investment and production cycle may be affecting trading dynamics for West Texas Intermediate (WTI) and Brent crude oil futures contracts. Many U.S. producers that may have traditionally hedged production years in advance may now only need to hedge using short-dated portions of the futures curve. Many domestic producers have shifted their production portfolios toward tight oil production, which has a short investment and production cycle, and could be reducing their participation in long-dated WTI futures. For example, the ratio of open interest for WTI contract months 13 and longer to current U.S. monthly production has declined since 2013. In contrast, as of October 2019, a similar ratio for Brent crude oil to production outside the Organization of the Petroleum Exporting Countries (OPEC) and the United States increased to its third-highest level, suggesting increased liquidity in long-dated Brent futures. Brent is the relevant crude oil benchmark used among non-OPEC, non-U.S. oil producers. Similar research from the U.S. Commodity Futures Trading Commission (CFTC) published last year suggests the lower open interest among long-dated WTI futures contracts is a result of the changing investment and production cycle for U.S. oil production. In contrast, new upstream projects outside the United States are primarily deepwater projects, which have a long investment and production horizon. These qualities could be contributing to increased participation in the long-dated portion of the Brent future curve. ... More »