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Energy Tomorrow Blog

MSR: Reading Between the Lines on Energy Recovery

monthly-stats-report  consumers  economic recovery 

Dean Foreman

Dean Foreman
Posted October 15, 2020

While objective interpretation of economic and energy data always is challenging, it’s especially difficult in this pandemic-impacted year to determine whether current data signal good news for consumers, the broader economy, and the natural gas and oil industry that is a key driver in the U.S. economy.

That said, API’s new Monthly Statistical Report (MSR) shows progress. Here’s what we see in the latest petroleum data from September, and it says a lot about resilience amid stressful circumstances.

API’s primary data on U.S. petroleum markets for September suggested that crude oil supply and exports rose, while demand – which since 1945 has dropped on average by 4.3% each September following the peak summer driving season – fell by much less than normal. In other words, 2020 didn’t exhibit typical seasonality, since there was less discretionary travel through the COVID-19 pandemic and relatively more driving out of necessity. Thus, it’s not surprising that petroleum consumption held up better than average in September.

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MSR: Markets are Rebalancing, Though Uncertain Road Lies Ahead

Dean Foreman

Dean Foreman
Posted September 17, 2020

Sometimes, through the headlines, it can be hard to see that the economy and oil markets recently have made noteworthy progress toward rebalancing and normalizing – which is encouraging news for the industry, the country and consumers. 

While petroleum demand remains below where it was this time a year ago and is likely to stay below 2019 levels until the latter half of 2019, according to the U.S. Energy Information Administration (EIA), signs are visible of a recovery from lows earlier this year.

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Continued Progress Seen in Petroleum Demand

petroleum  demand  oil markets  growth 

Dean Foreman

Dean Foreman
Posted September 11, 2020

While oil markets remain concerned over the outlook for petroleum demand – see John Kemp’s piece arguing there’s lost momentum – a number of important indicators of transportation and industrial activity corroborate API’s primary data suggesting a more nuanced landscape while also supporting the view that genuine progress has recently been achieved.  

Since petroleum demand has remained a solid indicator of economic activity, the information has broad applicability to everyone who is concerned with what’s happening now.  And for those of us in the industry, accurate and timely data are essential to the flow of real activities and investment dollars.

From here it looks like oil markets have been relatively impatient, having anticipated a continued tightening as demand has recovered and supply declined. The challenge is managing expectations for the rate of recovery.

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Global Economic Recovery and Oil Markets in Context

economic recovery  oil markets  oil demand 

Dean Foreman

Dean Foreman
Posted August 26, 2020

The 2020 global economic recession, triggered by the COVID-19 pandemic and government responses to it, is the deepest since World War II. Yet the World Bank, along with the Bloomberg consensus, expect global GDP growth to rebound in 2021.   

It appears $15 trillion of global stimulus is likely to have a positive impact on economic growth – and, with enabling infrastructure, markets and policies, could become a source of optimism for global oil markets.  

Historically, global GDP growth and increased oil demand have gone together – once there’s impetus for growth there must be energy to fuel that growth.

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U.S. Petroleum Markets – July Progress and a Potential Turning Point

monthly-stats-report  economic growth  oil markets 

Dean Foreman

Dean Foreman
Posted August 21, 2020

We’re seeing cautious optimism in the news about oil markets, with crude’s comeback broadly continuing for a third consecutive month in July with the gradual re-opening of state economies. API’s Monthly Statistical Report (MSR) for August presents the latest details. 

U.S. petroleum demand has clearly rebounded, albeit at a slowing growth rate. We see this as good news for staying on a positive track and reflective of progress made to overcome continued challenges with COVID-19.

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Foreign Investment, Supply Chains and Consumers

energy investment  infrastructure 

Dean Foreman

Dean Foreman
Posted July 29, 2020

A metric that bears watching as we gauge energy markets, trade, manufacturing and supply chains – all of which contribute to global economic growth and prosperity – is FDI, foreign direct investment, especially for energy projects in the U.S. and other nations.  

Recent data indicate that FDI has dropped by half since its peak in 2015, and experts believe that various factors, including the pandemic and escalated trade tensions, could continue or accelerate this decrease. This is potentially significant for the construction of new infrastructure, plants, processing facilities and other projects that have a direct bearing on better serving U.S. consumers and harnessing American energy.

Indeed, recent FDI trends signal a potential turning point.  


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Here’s Why U.S. Natural Gas Has Weathered the Pandemic

natural gas  electricity  production  consumers 

Dean Foreman

Dean Foreman
Posted July 21, 2020

Through the recent COVID-19 pandemic and resulting shocks to energy markets around the world, U.S. natural gas has remained a relatively bright spot

Record low prices have benefitted consumers, and at the same time many producers dedicated to natural gas in Pennsylvania, Ohio, West Virginia, Louisiana and East Texas have remained viable as cutbacks in oil and associated natural gas from other regions have taken effect.  And now about 90% of U.S. drilling for natural gas is concentrated in these regions, that is Appalachia and the Haynesville areas.

The drilling activity has reflected two fundamental observations.  The first is that, according to BTU Analytics, the recent breakeven price – that is, the Henry Hub wholesale market price needed to at least break even in drilling a new well – on average has remained near market prices despite COVID-19, a relatively warm winter and broad financial market concerns. The second observation is that natural gas well productivity, as reported by the U.S. Energy Information Administration, were resilient after some unexplained variation at the beginning of the year. 

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U.S. Petroleum Markets Continue Their Comeback in June

monthly-stats-report  petroleum  production 

Dean Foreman

Dean Foreman
Posted July 16, 2020

Although we have a long way to go for U.S. petroleum markets to recover to pre-pandemic levels, the comeback broadly continued in June as state economies re-opened despite ongoing challenges with COVID-19. This is seen in API’s Monthly Statistical Report (MSR) for July. 

With the daily news flow about COVID-19 – from America Shuts Down Again to More Than Half of States Trending Poorly – it has been challenging for oil markets to discern what’s actually happening. The MSR provides the most timely and comprehensive snapshot of U.S. markets for crude oil and major refined products, based on weekly surveys of up to 90% of the industry.

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Data: Industry Poised to Enable Economic Recovery

monthly-stats-report  economic recovery  oil and natural gas 

Dean Foreman

Dean Foreman
Posted June 18, 2020

As the U.S. and world confront the unprecedented combination of a public health crisis, significant economic downturn and tumultuous domestic and global oil markets, we have seen oil demand, prices, and consequently drilling and production fall by historic amounts.

API’s latest Monthly Statistical Report (MSR) for May and Industry Outlook for Q2 2020 offer important perspective on the most timely monthly U.S. data and expectations for energy markets.

Overall, we see market forces at work, with a re-balancing of supply and demand to historic proportions despite great uncertainties. The underlying fundamentals appear to be constructive and should position the U.S. natural gas and oil industry to participate in an economic recovery. And if the third-party consensus is correct the next year or so could bring positives for U.S. and global energy.


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The Oil Futures Rebound

crude markets  crude oil  demand 

Dean Foreman

Dean Foreman
Posted May 21, 2020

After crude oil futures prices plunged into negative territory for a day last month, there was a good deal of speculation that the same thing could happen this month. Some even pointed to the April futures meltdown as a “doomsday” scenario for U.S. natural gas and oil.

Well, a number of things happened on the way to oil’s “doomsday.”

At the outset, let’s note that what happened with futures in April didn’t repeat this month. Oil futures prices for June delivery of West Texas Intermediate crude, whose contracts expired Tuesday, closed at $32.50 per barrel – about 300% higher than they did for those contracts a month ago. Let’s explore why.

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