Providing coverage of Alaska and northern Canada's oil and gas industry
November 2023

Vol. 28, No.47 Week of November 19, 2023

ANS centers in $80s

Prices muted by surprise US inventory build, record US production

Steve Sutherlin

Petroleum News

Alaska North Slope crude held to the middle $80s Nov. 15 despite a sharp drop triggered by a surprise build in U.S. commercial inventories and record U.S. production.

ANS plunged $1.40 on the day to close at $83.65 per barrel, as West Texas intermediate plunged $1.60 to close at $76.66 and Brent dropped $1.29 to close at $81.18.

U.S. commercial crude oil inventories for the week ending Nov. 9 -- excluding Strategic Petroleum Reserve stocks -- jumped 3.6 million barrels from the previous week to 439.4 million barrels -- 2% below the five-year average for the time of year, the U.S. Energy Information Administration reported in its weekly report issued Nov. 15.

The inventory gain was twice the 1.8 million barrel increase expected by analysts that answered a Reuters poll.

Bears were further roused by data from the EIA report which showed U.S. crude production continued at the record 13.2 million barrels per day first reached in October -- the highest production month in U.S. history.

Conversely, total U.S. motor gasoline inventories dropped 1.5 million barrels for the period to 215.7 million barrels -- 1% below the five-year average for the time of year, the EIA said.

The boost in gasoline demand came as the effects of lower crude prices began to show up at the pump for consumers, and as consumer interest rates began a fall from post-pandemic highs in time to gas up tanks in anticipation of Thanksgiving travel.

AAA is projecting this Thanksgiving to be the third busiest on record, with 55.4 million travelers versus 58.6 million in 2005 and 56 million in 2019.

The Transportation Security Administration said it has screened a record number of passengers this year, and it expects a busy holiday travel season.

During the 12-day Thanksgiving travel period from Nov. 17 to Nov. 28, TSA projects it will screen 30 million passengers.

"We expect this holiday season to be our busiest ever. In 2023, we have already seen seven of the top 10 busiest travel days in TSA's history," said TSA Administrator David Pekoske.

The heaviest passenger screening volume in TSA history was on June 30 with some 2.9 million passengers at checkpoints nationwide. TSA will likely exceed this record this Thanksgiving holiday travel period, it said.

ANS fell 16 cents Nov. 14 to close at $85.05, while WTI was unchanged at $78.26 and Brent fell a nickel to $82.47.

Nov. 13 was an up day; ANS leapt $2.07 to close at $85.05, as WTI and Brent each jumped $1.09 to close at $78.26 and $82.52 respectively.

ANS inched 4 cents lower Nov. 9 to close at $82.60, as WTI shed 41 cents to close at $75.74 and Brent shed 47 cents to close at $80.01.

Prices fell Nov. 8, seeing ANS $2.13 lower to close at $82.56, while WTI lost $2.04 to close at $75.33 and Brent lost $2.07 to close at $79.54.

Despite volatile trading, from Wednesday to Wednesday ANS fell just 60 cents from $84.25 Nov. 7 to $83.65 Nov. 15.

On Nov. 15, ANS traded at a $2.04 premium to Brent and at a $6.99 premium to WTI.

OPEC: Negative sentiment overblown

The Organization of the Petroleum Exporting Countries said recent data confirms robust major global growth trends and healthy oil market fundamentals.

The U.S. economy continues the very strong growth it experienced in 3Q23, OPEC said in its November Monthly Oil Market Report issued Nov. 13, adding that the International Monetary Fund recently upgraded its Chinese economic growth projection for 2023 to 5.4%.

Potential downside risk to current robust global economic growth forecasts is minor and may include sustained restrictive monetary policies to fight inflation, and geopolitical developments, OPEC said.

Despite overblown negative sentiment in the market regarding China's oil demand and global oil market in general, the latest data shows Chinese crude imports increasing to 11.4 million bpd in October and remaining on track to reach a new annual record high, OPEC said. Chinese crude imports remained at a record level well above the five-year average, rising by 240,000 bpd, month-on-month, with year-on-year crude imports at 1.2 million bpd higher.

India's crude imports are also expected to pick up in 4Q23, reaching a record high this year, OPEC said.

"As the global oil demand continues to demonstrate strength and resilience, with better-than-expected growth in 4Q23, mainly in non-OECD countries, the Secretariat's latest forecast for global oil demand growth for 2023 is revised upward to reach 2.5 million bpd," OPEC said.

Non-OPEC supply projections were increased by 1.8 million bpd for 2023, the United States being the main growth contributor, OPEC said, adding, "Clearly, the U.S. liquids supply growth has been stronger than what is suggested by weekly data."

Weekly data, which has underestimated U.S. crude production since January, was followed by a significant monthly data upward catch-up trend, especially since August, OPEC said. The more reliable monthly data indicates a very gradual increase in U.S. crude production.

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