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Summary of Weekly Petroleum Data for the week ending June 14, 2024

U.S. crude oil refinery inputs averaged 16.8 million barrels per day during the week ending June
14, 2024, which was 281 thousand barrels per day less than the previous week’s average.
Refineries operated at 93.5% of their operable capacity last week. Gasoline production increased
last week, averaging 10.2 million barrels per day. Distillate fuel production decreased last week,
averaging 4.8 million barrels per day.
U.S. crude oil imports averaged 7.1 million barrels per day last week, decreased by 1.3 million
barrels per day from the previous week. Over the past four weeks, crude oil imports averaged
about 7.3 million barrels per day, 11.6% more than the same four-week period last year. Total
motor gasoline imports (including both finished gasoline and gasoline blending components) last
week averaged 1 million barrels per day, and distillate fuel imports averaged 150 thousand
barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve)
decreased by 2.5 million barrels from the previous week. At 457.1 million barrels, U.S. crude oil
inventories are about 4% below the five year average for this time of year. Total motor gasoline
inventories decreased by 2.3 million barrels from last week and are about 1% below the five year
average for this time of year. Both finished gasoline and blending components inventories
decreased last week. Distillate fuel inventories decreased by 1.7 million barrels last week and are
about 8% below the five year average for this time of year. Propane/propylene inventories
increased by 1.6 million barrels from last week and are 10% above the five year average for this
time of year. Total commercial petroleum inventories decreased by 0.2 million barrels last week.
Total products supplied over the last four-week period averaged 20.0 million barrels a day, up by
0.2% from the same period last year. Over the past four weeks, motor gasoline product supplied
averaged 9.1 million barrels a day, down by 1.0% from the same period last year. Distillate fuel
product supplied averaged 3.7 million barrels a day over the past four weeks, down by 1.5%
from the same period last year. Jet fuel product supplied was up 5.0% compared with the same
four-week period last year

United States President Joe Biden’s Senior Adviser for Energy and Investment, Amos Hochstein cautioned Lebanese officials about a potential limited Israeli attack on the country’s Hezbollah, Israeli broadcaster Kan reported on Thursday. Hochstein emphasized that if Hezbollah continues its near-daily assaults on northern Israel, the paramilitary organization could face an American-backed attack by the Israeli forces. He further emphasized the importance of finding a diplomatic solution to address the ongoing attacks by Hezbollah on northern Israel and to push back the Iran-backed group from the common border. Following his visit to Israel, Hochstein is currently in Lebanon to avoid a full-scale war across the common border amidst the recent escalation of hostilities. A drastic escalation of tensions between Israel and the Hezbollah militia in Lebanon over the past week has brought the prospect of an expansion of war across the Middle East ever closer. Following Israel’s assassination of a senior Hezbollah commander and a retaliatory rocket barrage fired on northern Israel, the Israel Defence Forces (IDF) released a statement Tuesday declaring that operational plans for a war in Lebanon have been approved.  Since the beginning of its onslaught on Gaza, Israel has exchanged almost daily fire with Hezbollah across the border. To date, Israeli air strikes and shelling have killed over 340 Hezbollah members and dozens of civilians in southen Lebanon, while Hezbollah rockets have killed 10 Israeli civilians and 15 IDF soldiers. But the exchanges intensified markedly last week after Israel assassinated Taleb Abdullah, the most senior Hezbollah commander to be killed since October. Hezbollah responded by striking the Mount Meron air traffic control base in northern Israel on Saturday, prompting the IDF to insist that “no harm to the unit’s capabilities” was caused by the attack. On Tuesday, Hezbollah released drone footage of military sites and civilian infrastructure in Haifa in what was seen as an exposure of the limits of Israel’s much-vaunted air defences in the north. Israeli Foreign Minister Israel Katz responded in a statement:

We are getting very close to the moment of deciding on changing the rules of the game against Hezbollah and Lebanon. In an all-out war, Hezbollah will be destroyed and Lebanon will be severely beaten.

Later in the day, the IDF issued a statement indicating that an offensive into Lebanon is looming. It declared:

As part of the assessment of the situation, operational plans for the attack in Lebanon were approved and implemented and decisions were made to continue accelerating the readiness of the forces in the field.

The Biden administration dispatched its special envoy for the Middle East, Amos Hochstein, to the region, where he held talks Monday with Prime Minister Benjamin Netanyahu, Defence Minister Yoav Gallant and President Isaac Herzog, before travelling on to Lebanon on Tuesday. Herzog reportedly discussed with Hochstein “the urgent need to restore security to the northern border,” a euphemism for destroying Hezbollah. While media reports presented Hochstein’s trip as an attempt to “deescalate” the conflict. Washington appears to be temporarily applying the brakes on its Israeli ally above all because it would prefer to have more time to cobble together an anti-Iranian alliance that includes the Arab Gulf states for war against Tehran.

The United States is planning to redirect all orders for Patriot air defense systems and interceptor missiles to Ukraine until the war-torn country gets enough to protect itself from Russian airstrikes, the Financial Times reported on Thursday, citing people briefed on the matter. According to the sources, the decision is expected to be officially announced later in the day. Last week, US President Joe Biden said that Washington’s priority will be to supply Kiev with Patriot systems and that other countries  (Israel) will have to wait for deliveries of the US-made defense system.

The U.S. Energy Information Administration (EIA) has lowered its West Texas Intermediate (WTI) oil price forecast in its latest short term energy outlook (STEO), which was released recently. In its June STEO, the EIA is forecasting that the WTI spot price will average $80.32 per barrel in the second quarter of 2024, $78.75 per barrel in the third quarter, $82.14 per barrel in the fourth quarter, and $79.70 per barrel overall in 2024.In its previous May STEO, the EIA projected that the WTI spot price would average $84.76 per barrel in the second quarter of 2024, $85.50 per barrel in the third quarter, $84.17 per barrel in the fourth quarter, and $83.05 per barrel overall this year. Both STEOs show that the first quarter 2024 WTI spot price averaged $77.50 per barrel and that the overall 2023 WTI spot price averaged $77.58 per barrel. The June and May STEOs also both project that the WTI spot price will average $83.50 per barrel in the first quarter of 2025, $81.50 per barrel in the second quarter, $80.50 per barrel in the third quarter, $78.16 per barrel in the fourth quarter, and $80.88 per barrel overall in 2025. In its latest STEO, the EIA highlighted that the April to May 2024 WTI front month futures price averaged $81.51 per barrel. The April to May 2023 WTI front month futures price averaged $75.27 per barrel and the 2021 to 2023 WTI front month futures price averaged $80.01 per barrel, the EIA’s June STEO showed. WTI refers to West Texas Intermediate crude oil traded on the New York Mercantile Exchange (NYMEX), owned by Chicago Mercantile Exchange (CME) Group, the EIA noted in its June STEO.

A report by Standard Chartered Bank Commodities Research Head Paul Horsnell on June 18 revealed that Standard Chartered is forecasting that the nearby future NYMEX WTI basis Cushing, Oklahoma, price will average $95 per barrel in the third quarter and $103 per barrel in the fourth quarter.

The company expects the commodity to average $106 per barrel in 2025, the report revealed. A report  by Horsnell on May 14 showed that Standard Chartered Bank had identical price projections for the third and fourth quarter of 2024 and for 2025 overall. A report  by the Fitch Group on June 13 revealed that BMI, a unit of Fitch Solutions, is forecasting that the WTI crude price will average $82 per barrel this year and $79 per barrel next year. In a separate report sent to Rigzone back in March, BMI projected that the WTI crude price would average $82 per barrel in 2024 and $81 per barrel next year. In a research note sent  by the JPM Commodities Research team on June 13, J.P. Morgan projected that the WTI spot price will average $79 per barrel in 2024 and $71 per barrel in 2025. A research note sent to Rigzone on May 20 by the JPM Commodities Research team had identical WTI spot price forecasts.m Morningstar team, analysts at the company said, “on a quarterly basis, oil prices look weak”. The analysts added in the report that they “expect continued weakness, with $65-$70 a barrel (WTI) a likely possibility in 2024, if not lower”. The Morningstar report noted that “WTI prices look poised to decline” and stated that “WTI prices remain well above midcycle levels”.

• U.S. gasoline demand has been tepid in the early part of the driving season, resulting in rising stocks and lower refining margins.
• Strong refining utilization and increased production have added to the pressure on refining margins.
• The potential for a busy hurricane season in the Gulf Coast could disrupt production and affect gasoline supply later in the summer. Surging U.S. gasoline production and tepid demand early into the driving season have boosted American gasoline stocks in recent weeks, weighing on refining margins and oil market sentiment. Weaker gasoline demand compared to last year, a well-supplied market with refineries boosting output after spring maintenance, and the recent slide in oil prices have helped lower U.S. gasoline prices at the start of the summer driving season. This is good news for American consumers and the sitting U.S. president seeking re-election in November. However, rising stocks and refinery runs are depressing refining margins, which could prompt U.S. refiners to reduce fuel production soon, especially if gasoline demand remains tepid for most of the summer.  The biggest wild card for gasoline supply and prices later this summer could be what is expected to be a busier-than-usual hurricane season that could force some U.S. Gulf Coast refineries to shut down operations in case major storms move to the coasts of Texas and Louisiana in August and September.  Combined, the two refining regions, Texas and Louisiana, account for 48% of total U.S. refinery capacity, while the potential for a stronger hurricane season suggests heightened risk for weather-related production outages in the U.S. oil and natural gas industry, the EIA warned last month.  Although the path of a single hurricane or major storm is unlikely to affect more than a single cluster of refineries, more than 1.0 million barrels per day (bpd) of capacity could be temporarily taken offline in anticipation of a major storm, the administration said.  Until a potential shutdown of refineries occurs later this summer, the early summer picture of the U.S. gasoline market suggests that refiners may have overestimated demand.  Weekly gross inputs into U.S. refineries jumped to 17.511 million bpd in the latest reporting week to June 7, EIA data showed. That’s the highest since 2019, before COVID.  But with refiners cranking up fuel output amid weaker demand, gasoline stocks have been rising in the U.S. over the past weeks, weighing on refiners’ profits for producing a barrel of gasoline.  Refinery utilization was at 95% in the week to June 7, compared to 93.7% at this time last year, and the highest seasonal since before COVID. 

As a result, U.S. gasoline stocks have increased in each of the three weeks to June 7 and were at 233.5 million barrels then. This was an inventory build of 2.6 million barrels for the seven days to June 7, with production averaging 10.1 million bpd. To compare, the prior week saw an inventory build of 2.1 million barrels, while production stood at an average 9.5 million bpd. If weak demand and rising stocks persist, U.S. refiners could reduce their utilization soon as their refining margins would be further eroded.  U.S. gasoline cracks were $21 per barrel lower in May, compared to the same month of 2023, and were at their lowest level since May 2021, according to data from Energy Intelligence. Signs of improving demand are yet to be seen—for now, it’s lackluster despite falling gasoline prices.

According to GasBuddy data, U.S. gasoline demand in the week from June 9 to June 15 declined by 1.4% from the prior week and was 1.1% below the four-week average, Patrick De Haan, head of petroleum analysis at GasBuddy, said on Sunday. 

The White House denied previous reports that it had suspended a high-level meeting with Israeli representatives after Israeli Prime Minister Benjamin Netanyahu accused Washington of withholding weapons for Israel, The Times of Israel reported on Wednesday, citing a US official. “Nothing has been canceled,” the source told the media outlet, adding that “meetings with Israeli officials are being held throughout the week at expert and senior levels on a range of topics.” According to the report, the official reiterated that the US has “no idea” of what Netanyahu was talking about, stressing that “that’s not a reason for rescheduling a meeting.” NN: ANOTHER  SELL OUT1

Netanyahu urges US to send weapons to ‘finish the job’

Israeli Prime Minister Benjamin Netanyahu on Tuesday called on the United States to stop “withholding” weapons and ammunition for Israel so that Israel can “finish the job a lot faster.” The prime minister stressed that Israel is “fighting for its life” and against Iran and other “common enemies.” In the video address, Netanyahu shared that US Secretary of State Antony Blinken provided assurances that Washington is working “day and night” to remove “these bottlenecks” during their last meeting. “I certainly hope that is the case,” the Israeli prime minister added. An anonymous Israeli negotiator previously stated that at least tens of hostages remain alive “with certainty” in the Gaza Strip.

Israeli Prime Minister Benjamin Netanyahu on Tuesday called on the United States to stop “withholding” weapons and ammunition for Israel so that Israel can “finish the job a lot faster.” The prime minister stressed that Israel is “fighting for its life” and against Iran and other “common enemies.” In the video address, Netanyahu shared that US Secretary of State Antony Blinken provided assurances that Washington is working “day and night” to remove “these bottlenecks” during their last meeting. “I certainly hope that is the case,” the Israeli prime minister added. An anonymous Israeli negotiator previously stated that at least tens of hostages remain alive “with certainty” in the Gaza Strip.

Gantz: Time running out for diplomatic solution to Lebanon border

Israel’s National Unity Party leader Benny Gantz  told United States President Joe Biden’s Senior Adviser for Energy and Investment Amos Hochstein that the “time is running out” to resolve the tensions with Hezbollah on his country’s border with Lebanon through diplomatic means. Following the two officials’ meeting, Gantz’s office stated he informed Hochstein that he is committed to “removing the threat Hezbollah poses to the citizens of northern Israel, regardless of developments on the war in Gaza” and insisted he will support “any responsible and effective political or military decision on the matter from outside the government.” Gantz left the Israeli government earlier this month, claiming Prime Minister Benjamin Netanyahu was “preventing us from approaching true victory” in the conflict with Hamas, and called on Netanyahu to schedule an election.