Energy Report: Signs Of Spring

Ah, Spring. When young man’s fancy turns to thoughts of oil demand. Despite fears of more lockdowns in Europe, there are signs that demand is rising. Iraq, for example, felt confident enough to raise its oil price to its Asian customers, and data out of China suggest that oil demand is improving and should continue to do so. Data out of China shows China's strong thirst, not only for oil but other commodities as well. 

China reported that their March crude oil imports were at 49.66 million tons, up 21% year over year. They also saw natural gas imports jump in March to 8.73 million tons, up 26.1% ear over year. Iron ore, March imports were at 102.11 million tons, up 18.9% year over year. Copper, March Imports 552,317 tons, up 25% year over year. China’s soybean March imports were at 7.77 million tonnes, up 82% year over year, and meat imports at 1.02 million tons, up 11.4% year over year.

U.S. gasoline demand is showing signs of surging and oil traders should brace for a substantial crude oil draw in this week’s report. U.S. production, while creeping up, is still a far cry from its post-pandemic highs. That is leading to empty pipelines. Reuters reports that "By the fourth quarter, total utilization of the largest oil pipelines from the Permian is expected to drop to 57%, consultancy Wood Mackenzie said. The nadir during the last market bust in 2016 was roughly 70%. U.S. crude output is currently about 11 million bpd and is not expected to grow much until 2022. But more pipelines were already set to come online, growing the gap between production and capacity covered by long-term contracts to a record over 1 million bpd in February, according to energy research firm East Daley Capital.

Pump Jack, Oilfield, Oil, Fuel, Industry, Petroleum

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The drilling productivity report from the EIA and as reported by Reuters said that "U.S. oil output from seven major shale formations is expected to rise for a third straight month, climbing by about 13,000 barrels per day (bpd) in May to 7.61 million bpd, the U.S. Energy Information Administration said on Monday. The biggest increase is set to come from the Permian, the top-producing basin in the country, where output is expected to rise by 52,000 bpd to about 4.47 million bpd, the highest since April 2020, the EIA said in a monthly forecast. Output from other top producing basins such as the Bakken and Eagle Ford are expected to slide by 12,000 bpd and 9,000 bpd, respectively. Production in the Bakken basin of North Dakota and Montana is expected to drop to 1.1 million bpd, the lowest since July 2020, according to the data.

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