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Crude Oil Market Monitor

Weekly analysis of the fundamental factors of the US and global crude oil markets: supply, rigs count, demand, inventories, SPR, prices and open positions of traders.

Crude Oil Prices

WTI price was $88.2 on October 02, 2023. YTD growth is 36.4%. It's 30.5% down from the 5 year top of $127.0. Brent price was $90.5 on October 02, 2023. YTD growth is 23.6%. It's 30.5% down from the 5 year top of $130.1.

Brent - WTI spread was $2.2 on October 02, 2023. YTD growth is -73.6%.

Source: CTFC

WTI NYMEX long - short money managers open positions was 301,660 contracts on September 26, 2023. YTD growth is -8.7%. It's 24.1% down from the 5 year top of 397,549 contracts and above the middle line in the 5 year coridor which implies support for the oil price.

Source: CTFC

WTI NYMEX money managers open long positions were 330,645 contracts on September 26, 2023. YTD growth is -6.2%. They are 25.6% down from the 5 year top of 444,681 contracts. WTI NYMEX money managers open short positions were 28,985 contracts on September 26, 2023. YTD growth is 31.4%. They are 31.4% up from the 5 year bottom of 22,057 contracts.

Global Crude Oil Demand and Production

Source: EIA

For the quarter ending June 30, 2024 world oil demand is forecasted at 101.91 mln. bpd, production at 102.67 mln. bpd so inventories change is expected at 0.76 mln. bpd. This implies oil price will have a pressure toward decrease this quarter.

Crude Oil Inventories


Inventories are defined by supply and demand balance. If oil supply is higher than demand than inventories are growing. If oil demand is bigger than supply than oil inventories are declining. These moves of oil inventories have a direct impact on oil prices, usually more direct than change in supply or demand per se.

Also, it's worth taking into account that inventories cannot be zero or even close to zero. Every storage capacity has a minimum level which should be maintained. And at the same time inventories have a maximum capacity level beyond which oil cannot be stored or a long time and money are required to add new oil storage capacity to the market. So even a small decline of oil stocks like 5% is considered a big change and leads to oil prices growth. And vice versa with inventories growth.
Source: EIA

US crude oil inventories, excluding Strategic Petrolium Reserve (SPR) were 416,287 thousand barrels on September 22, 2023. YTD growth is -11.5%. They are 1.5% up from the 5 year bottom of 409,950 thousand barrels which implies support for the oil price.

OECD commercial crude oil and other liquids inventory is expected to reach 2,844 mln. barrels on December 31, 2024.

Source: EIA

US Crude Oil Production


Number of oil rigs characterize drilling activity which in turn defines the number of oil wells which will come to the market in the near future. This makes oil rig count a leading indicator of oil production and is a closely monitored parameter of an oil market.
Source: EIA, Baker Hughes

US crude oil production was 12,900 thousand bpd on September 22, 2023. YTD growth is 4.9%. It's 1.5% down from the 5 year top of 13,100 thousand bpd.

Source: Baker Hughes

US oil rig count was 502 rigs on September 29, 2023. YTD growth is -37.6%. It's 37.8% down from the 5 year top of 807 rigs.

Source: Baker Hughes

The number of oil rigs in the US regions with the most active drilling activity is the following as of September 29, 2023: Permian 308 rigs, Eagle Ford 44 rigs, Cana Woodford 16 rigs and other oil regions 98 rigs.

Key US Tight Oil Regions


US tight oil regions play a key role in US oil extraction. Nearly 70% of oil is produced in these regions. Tight oil is characterized of fast capex cycles (weeks from drilling to production) and fast depletion (some sources say production from shale wells typically falls 65% to 90% over the first year). As a result, this tight oil production capacity can come fast to the market in case of high oil prices and can leave the market soon in case of price drops. So, US oil production in tight oil regions is the key parameter to monitor to understand whether overall US oil production will grow or decline.
Source: EIA

US tight oil production by regions as of October 01, 2023 is the following: Anadarko 419 th. bpd, Appalachia 146 th. bpd, Bakken 1,227 th. bpd, Eagle Ford 1,109 th. bpd, Haynesville 36 th. bpd, Niobrara 682 th. bpd and Permian 5,773 th. bpd.


Below is the map with locations of key regions where US tight oil is extracted.

Notes

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bpd - barrels per day
bbl - barrel, barrels
th. - thousand, thousands
mln. - million, millions
YTD - year to date