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Energy Tomorrow Blog

API MSR: U.S. Petroleum Demand and Imports Higher, Supply Languished

monthly-stats-report  oil and natural gas production  consumers  imports 

Dean Foreman

Dean Foreman
Posted October 15, 2021

API’s new Monthly Statistical Report (MSR), based on U.S. petroleum primary market data through September, reinforced a combination of developments that has been recurrent so far in 2021 – that is, demand outpaced supply, inventories fell and, consequently, imports and prices rose. 

 

Historically, this combination of factors has also led to further market tightening, which could put additional upward pressure on costs and prices.

 

The underlying drivers come back to the basics of demand, which reached a record high for the month of September at 20.6 million barrels per day (mb/d), and supply that has remained muted due to the industry’s continued financial, work force and supply chain constraints, coupled with a lack of policy support as we discussed here.

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Making Sense of Demand vs. Supply, Key Factors Affecting Production

oil and natural gas production  supply  demand  investments  economic recovery 

Dean Foreman

Dean Foreman
Posted October 7, 2021

The fundamentals of natural gas demand outpacing supply have driven prices to their highest for the season since 2008, and some analysts expect a natural gas supply crunch with potentially wide impacts this winter – including potential market tightening that could significantly affect household budgets and perhaps could risk physical hardship for some.

In such a context, many Americans may have a hard time figuring out what’s happening and how it affects them: If natural gas prices have soared, why hasn’t production risen more quickly to meet post-pandemic energy demand and moderate the conditions driving up costs? And another one: Why is the U.S. still exporting liquefied natural gas (LNG)? 

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Coal’s 2021 Resurgence and What It Could Mean for Emissions, Consumers

coal  natural gas  electricity  consumers  emission reductions 

Dean Foreman

Dean Foreman
Posted October 1, 2021

Natural gas prices have entered rarified territory due to demand outpacing production and supply, creating headwinds for the Biden administration’s emissions reduction goals and potentially impacting the energy cost savings consumers have enjoyed since the U.S. energy revolution launched more than a decade ago.

Prices in Asia Pacific (Japan-Korea) settled at $29.20 per million Btu (mmBtu) on Sept. 27 – their highest on record since 2012. Meanwhile, U.S. natural gas prices of nearly $5.50 per mmBtu at Henry Hub were relatively inexpensive compared with international ones but rose to their highest for the month since 2008. Natural gas prices like these are unusual for the fall, before there’s reason to believe the approaching winter could be particularly cold. 

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Divergent Times for U.S. Oil and Natural Gas Demand, Supply

monthly-stats-report  supply  oil demand  imports 

Dean Foreman

Dean Foreman
Posted September 22, 2021

Economics and energy market data for the third quarter of 2021 were marked by divergences. That’s the main thrust of API’s quarterly Industry Outlook for Q3 2021 and Monthly Statistical Report (MSR) with primary data for August. 

Demand for oil and natural gas has risen strongly along with the economic recovery, as we discussed here. At the same time, global oil and natural gas investments have fallen to record lows so far in 2021, (see here). Consequently, supplies have failed to keep pace with demand and generally resulted in lower inventories, higher U.S. imports and the strongest prices for crude oil, gasoline and natural gas since 2014.

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Low Investment and Implications for Global Supply

investments  global energy  oil supply 

Dean Foreman

Dean Foreman
Posted September 17, 2021

Global oil and natural gas investments have fallen to record lows so far in 2021, as we recently discussed here. Yet, demand for both has risen alongside the economic recovery. Consequently, supplies haven’t kept pace with demand, and the mismatch between the two propelled gasoline and natural gas prices this summer to their highest levels since 2014.

 

In fact, global natural gas prices set a record-high for summer months as demand outdistanced supply.  Oil prices eased in August following a 16% run-up over the previous three months for Brent crude oil, but were back above $70 per barrel in mid-September.

 

Although economic and pandemic-related uncertainties and expected OPEC+ output increases have also likely impacted prices, the lack of investment for oil and natural gas production is an ominous sign, given that major conventional global oil and natural gas projects can take years to start producing. We could be in for global oil market tightening in 2022 and further upward pressure on prices, with prices already at their highest level since 2014.

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Price Inflation Could Imperil the Economic Recovery

consumers  prices  energy costs 

Dean Foreman

Dean Foreman
Posted September 1, 2021

One of the great stories of the U.S. energy revolution is that, as it broke productivity records, it ultimately imposed downward pressure on the prices for energy and other goods and services, benefiting U.S. household budgets.

 

Yet, so far in 2021, prices have risen for energy and most other goods – and could bring unfavorable surprises for macroeconomic policies and households alike.

 

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API MSR: Highest Petroleum Demand Since 2019; Imports and Prices Rose in July

monthly-stats-report  demand  consumers 

Dean Foreman

Dean Foreman
Posted August 19, 2021

As the summer driving season motors on, we’re watching not only the impacts of seasonally higher gasoline prices on U.S. households, but also costs in other areas affecting family budgets – and whether those costs are seasonal or longer-lasting. This is the context for API’s new Monthly Statistical Report (MSR), based on July data.

   

As we discussed here, U.S. consumers have benefitted recently from fuels and products derived from relatively inexpensive domestic crude oil and natural gas – well below international price levels. This was due to abundant domestic crude oil production. 

That’s changed now. Domestic production is lower, partly due to the aftereffects of the 2020 COVID-19 recession as well as the delay or cancellation of energy projects that take years to complete.  In this sense, the pulse of U.S. petroleum markets is vital, and API’s primary data can offer a leading perspective.

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The White House, OPEC and the Need for Domestic Oil Production

president  opec  federal leases  domestic oil production 

Dean Foreman

Dean Foreman
Posted August 16, 2021

Some observations follow on the Biden administration’s continued call for OPEC to increase its crude oil production – even as it curbs or discourages U.S. production – plus the president’s recent announcement  that he wants the Federal Trade Commission (FTC) to investigate summer gasoline prices.

We’ll take the FTC first. Chair Lina Khan has been asked to look into any potential illegal conduct or anti-competitive practices that may have occurred during the summer driving season.

The U.S. Energy Information Administration (EIA) reported the national average for gasoline reached $3.172 per gallon Aug. 9, the highest point since October 2014. “[T]here have been divergences between oil prices and the cost of gasoline at the pump,” wrote National Economic Council Director Brian Deese. “While many factors can affect gas prices, the president wants to ensure that consumers are not paying more for gas because of anti-competitive or other illegal practices.”

Numerous federal and state agencies have investigated the causes of price spikes for decades and consistently have found that the markets and other factors are responsible for price fluctuations. If the White House truly believes “anti-competitive or other illegal practices” have elevated gasoline prices, it’s strange that it would look to a cartel of oil-exporting countries to help solve the problem. In fact, the administration is floating a false premise on what’s happened this summer with gasoline prices.

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MSR: June Petroleum Demand Outpaces Supply, Imports Rise

monthly-stats-report  demand  supply  economic growth 

Dean Foreman

Dean Foreman
Posted July 21, 2021

It’s great for the U.S. economy that, with urban re-openings and the onset of the summer driving season, petroleum demand returned to over 20 million barrels per day (mb/d) in June, according to API’s primary data presented in our latest Monthly Statistical Report (MSR).

 

However, domestic oil supplies have not been able keep pace, and consequently U.S. crude oil imports and consumer prices have suddenly risen, which ultimately could contribute to the list of expenses stressing household budgets, such as higher costs for housing, vehicles and many other goods and services.

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Oil Demand Back, But Supply Remains Key Question

monthly-stats-report  supply  oil demand 

Dean Foreman

Dean Foreman
Posted June 17, 2021

The expectations and real prospects for global and U.S. economic recovery – and energy markets along with them – have accelerated and appear bright. That’s the overarching point in API’s quarterly Industry Outlook for Q2 2021 and Monthly Statistical Report (MSR), echoing what we have said since the third quarter of last year (see here, here and here). 

 

Yet, while API’s primary data for May 2021 show the recoveries in U.S. economic growth and petroleum demand have continued to go hand-in-hand, potential record global oil demand growth this year and the next, per the U.S. Energy Information Administration (EIA), could be overshadowed by the lowest industry-wide real capital expenditures on record for any quarter, by API estimates.

 

Demand up and capital investment down by record amounts is a concerning combination.

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