The U.S. inventory of oil and gas is edging closer to hoarder status.
Natural gas storage remained more than 400 billion cubic feet (Bcf) higher than the 5 year average, and draws on supply were nearly four times smaller than the average for the week of Dec. 18, the U.S. Energy Information Administration (EIA) said.
Crude inventories also continued to swell, with reserves nearing 80-year highs for December.
The 32 Bcf draw compares to the 5 year average withdrawal of 122 Bcf and 2014’s withdrawal of 51 Bcf, said Pearce Hammond, managing director and co-head of E&P research, Simmons & Co. International. However, the draw on supply was higher than Bloomberg’s consensus expectation of 26 Bcf.
Stocks held at 3.8 Tcf, 12.1% more than the 5-year average of 3.40 Tcf.
“Assuming normal weather for the remainder of the winter, we estimate April 1 working gas in storage at 2.1 Tcf,” Hammond said in a Dec. 28 report.
For the first three weeks of December, net gas draws were 66 Bcf, 42% lower than 2014’s 113 Bcf draw.
Simmons analysts predict that U.S. natural gas production will fall by 600 MMcf/d or by 1% in 2016, the first such decline since 2005.
El Niño conditions have played havoc with the weather in 2015. Year-to-date temperatures across the globe were 1.57F higher than the 20th century average, according to the National Oceanic and Atmospheric Administration (NOAA).
Crude
U.S. commercial crude oil inventories (excluding the Strategic Petroleum Reserve) increased by 2.6 million barrels (MMbbl) from the previous week to 487.4 MMbbl, near levels not seen in December in at least the last 80 years, EIA said.
Since oil production hit a high of 9.2 MMbbl/d in June, oil has inched down by about 510 Mbbl/d in the Lower 48, including the Gulf of Mexico.
Enterprise Products Partners L.P. (NYSE: EPD) said Dec. 23 that it will provide pipeline and marine terminal services to load its first export of U.S. crude oil. The 600 Mbbl of domestic light crude oil is scheduled to load at the Enterprise Hydrocarbon Terminal on the Houston Ship Channel during the first week of January 2016.
“Total net inventories held essentially flat vs. the prior week--a 2.6 MMbbl build in crude was offset by a net draw in total product stocks of a similar magnitude,” Roger D. Read, senior analyst, Wells Fargo Securities, said in a Dec. 30 report.
Estimated Lower 48 production was up 20 Mbbl/d for the week of Dec. 25.
U.S. crude oil imports averaged 7.9 MMbbl/d, up by 566 Mbbl/d from the week of Dec. 18, EIA said.
The front month WTI (West Texas Intermediate) contract is trading at about $36.80 per bbl, or a decline of 2.9% compared to the Dec. 29 closing price, Read
Contact the author, Darren Barbee, at dbarbee@hartenergy.com.
Recommended Reading
Exclusive: Chevron Balancing Low Carbon Intensity, Global Oil, Gas Needs
2024-03-28 - Colin Parfitt, president of midstream at Chevron, discusses how the company continues to grow its traditional oil and gas business while focusing on growing its new energies production, in this Hart Energy Exclusive interview.
Imperial Expects TMX to Tighten Differentials, Raise Heavy Crude Prices
2024-02-06 - Imperial Oil expects the completion of the Trans Mountain Pipeline expansion to tighten WCS and WTI light and heavy oil differentials and boost its access to more lucrative markets in 2024.
Carlson: $17B Chesapeake, Southwestern Merger Leaves Midstream Hanging
2024-02-09 - East Daley Analytics expects the $17 billion Chesapeake and Southwestern merger to shift the risk and reward outlook for several midstream services providers.
Midstream Builds in a Bearish Market
2024-03-11 - Midstream companies are sticking to long term plans for an expanded customer base, despite low gas prices, high storage levels and an uncertain political LNG future.
Exclusive: Renewables Won't Promise Affordable Security without NatGas
2024-03-25 - Greg Ebel, president and CEO of midstream company Enbridge, says renewables needs backing from natural gas to create a "nice foundation" for affordable and sustainable industrial growth, in this Hart Energy Exclusive interview.