John Kemp's most recent chartbook.

https://jkempenergy.files.wordpress.com/2023/10/cushing-oil-inventories-and-prices.pdf

Afternoons are pretty quiet for crude oil. There is a spike in price action and volume from 2:00 to 2:30pm. Between 2:30pm and 4pm there is very limited action in crude.

Interesting thread. Does a good job illustrating the huge lead time between buying a cargo of crude and getting the refined products from that cargo. His example is a little extreme but still valid. (For example Brent cargoes trade 15 days ahead while in his example he uses a Nigerian cargo trading almost 80 days ahead. Many cargoes are probably somewhere in the middle)

From John Kemps 'Best In Energy' today

U.S. CRUDE futures are trading in contango for the first two listed months (Dec/Jan and Jan/Feb) as traders become more confident supplies around the NYMEX delivery point at Cushing will be adequate and there will be no further depletion. The first two months are in contango for the first time since the end of June, before Saudi Arabia and its OPEC⁺ partners implemented their additional production cuts:

CL having such a hard time catching a bid. Just now we get news:

Please tell me where my logic is wrong, because I'm pretty sure it is. If the SPR historically was at 700K, according to this chart:



Then, if they refill from 350K to 700K, and each CL contract is 1000 barrels, does that mean that the "equivalent" purchase would be 350 CL contracts?

The US alone produces over 20Mbpd of crude now (and consumes almost 20Mbpd). 350K seems like ... not a lot. (source: https://www.eia.gov/tools/faqs/faq.php?id=709&t=6 )

Where's the flaw in my logic about number of contracts here?

@josh the argument is that with Production at almost 14 million bbl/day that the SPR is far less important than it used to be. The US is virtually oil self sufficient.

When SPR data started back in 1982, SPR + 90 days of Production was approximately 1 Billion Barrels. At US Production low/SPR highs around 2009 this number increased to 1.15 Billion Barrels. Today even with SPR depleted that number is 1.54 Billion Barrels. (Admittedly right before Covid started it was almost 1.8 Billion)

EDIT: Didn't see second half of question. SPR is reported in thousands of Barrels and since a futures contract is a 1000 barrels as well you would need 350,000 contracts to replenish it back to prior levels,

Thanks @SMCJB , can't believe I didn't read the axis label on that chart :-O I was thinking that a 700K barrel SPR was ... not very "strategic" or much of a "reserve"

josh 

Thanks @SMCJB , can't believe I didn't read the axis label on that chart :-O I was thinking that a 700K barrel SPR was ... not very "strategic" or much of a "reserve"

Does the US gov trade WTI crude on the NYMEX?

blackgrey45 

Does the US gov trade WTI crude on the NYMEX?

I can't imagine that they do, but I could be wrong. I suspect they have some account which funds purchase of physical oil at spot prices when they restock SPR. My comparison wasn't meant to imply that they do this, just looking at what an "equivalent" purchase in the futures market would look like, though that's possibly also a completely flawed way to look at it. As you can see, I'm not a commodities trader (just trying to learn a few things)!

February crude contract up about 8% from the December 13 low of $67.98. I think crude is firming up partly because of the Fed and European central bank discussions to cut rates next year and conflict in the Red Sea. Crude would be trading in the mid 60s without those fundamental things. US, among other countries like Gayana and Brazil, is producing record crude as OPEC continues to lose market share.