Weekly Petroleum Report -- 1/9/2013

January 9, 2013 09:41 AM

Crude Oil --

The U.S. Energy Information Administration (EIA) reports estimates of daily U.S. crude oil production during 2012 at 6.4 million barrels per day (bbl/d). That marks the highest level of annual production since 1997 -- an increase of 0.8 million bbl/d over 2011. The report predicts strong growth in crude oil production in the coming years, increasing to 7.3 million bbl/d in 2013 and 7.9 million bbl/d in 2013 -- which would be the highest rate of annual crude production since 1988.

According to the EIA report, "Over the past three years, crude oil production growth in the United States has been driven by increased drilling in tight oil formations in Texas, North Dakota, and a handful of other states. Short Term Energy Outlook forecasts published throughout 2012 were repeatedly revised higher as new production data indicated improvements in rig efficiencies (the number of wells a rig can drill in a year) and initial production rates (average production per day over the first 30 days of a well's production."

The same factors that have allowed domestic crude production to flourish should continue and drive further production increases in the coming years.

Currently February 2013 crude sporting a 0.04 decrease to 93.11 per barrel -- ranging today from 92.68-93.65.

Propane --

U.S. propane stocks fell 1.1 million barrels to end at 65.6 million barrels last week, 11.3 million barrels (21%) higher than a year ago. Midwest regional inventories dropped by 1.5 million barrels, while East Coast inventories declined by 0.1 million barrels. Rocky Mountain/West Coast stocks dropped by 0.1 million barrels, and the Gulf Coast region gained by 0.7 million barrels.

Propylene non-fuel-use inventories represented 5.3 percent of total propane inventories.

Distillate --disstuss1 7

Distillate stocks have finally crossed over into five-year average territory adding 6.8 million barrels to stocks on hand. This is still 16.8 million barrels below the same time last year, but with warmer temperatures forecast for the Eastern 2/3s of the United States in the short-term, any additions to distillate stocks will move domestic supply closer to the center of the five-year average. The warmer-than-expected weather may result in farm diesel pricing dropping farther, as competition between ruby red (farm diesel) and heating oil leans in favor of farm fuels.




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