Commodity Corner: Oil Falls on EIA Stocks Report

- Commodity Corner: Oil Falls on EIA Stocks Report

Wednesday, July 27, 2011
Rigzone Staff
by Matthew V. Veazey

U.S. commercial crude oil inventories as reported by the Energy Information Administration reversed course last week, catching analysts off-guard and contributing to lower oil prices Wednesday.

Light sweet crude oil for September delivery lost 36 cents to settle at $97.40 a gallon after the EIA reported that oil stocks rose 0.65 percent last week to 354 million barrels. The 2.3 million-barrel week-on-week build contrasted with analysts' expectations; interestingly, analysts surveyed by Platts had predicted a draw of 2.3 million barrels for the period.

Prior to Wednesday's report, EIA had reported seven straight weeks of falling inventories. From May 27 to July 15, oil stocks reportedly declined by 5.9 percent. The Brent benchmark lost 85 cents to end the day at $117.43 a barrel.

The WTI traded within a range from $97.28 to $99.50 while the Brent fluctuated from $117.26 to $118.34.

The newly formed Tropical Storm Don is expected to affect operations somewhat at some Western Gulf of Mexico oil and gas installations as it tracks toward the Texas coastline. However, the National Hurricane Center on Wednesday afternoon was not expecting it to intensify into a hurricane. Front-month natural gas ended the day unchanged at $4.37 per thousand cubic feet.

August natural gas futures peaked at $4.41 and bottomed out at $4.34 during the midweek session.

Gasoline lost a penny to settle at $3.14 a gallon Wednesday. The intraday range for the August contract fluctuated from $3.135 to $3.18.

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How Dependent Is the U.S. on Foreign Oil? - EIA Reports Current Trends

- How Dependent Is the U.S. on Foreign Oil? - EIA Reports Current Trends

Thursday, July 14, 2011
Rigzone Staff
by Barbara Saunders

The U.S. imported about 49 percent of the crude oil and refined petroleum products that were consumed during 2010, the U.S. Energy Information Administration (EIA) noted in a recent brief on the issue.

About half of these imports came from the Western Hemisphere, EIA said, adding that U.S. dependence on foreign petroleum has declined since peaking in 2005.

Canada is the United States' leading crude oil supplier, EIA reported.

Consumption, Production and Import Patterns

The U.S. consumed 19.1 million barrels per day (MMbd) of petroleum products during 2010, making it the world's largest petroleum consumer, EIA said.

The U.S. was third in crude oil production at 5.5 MMbd. But since crude oil alone does not constitute all U.S. petroleum supplies. " . . . [B]ecause crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and there are other sources of liquid fuel, including biofuels," EIA observed, reporting that these additional supplies totaled 4.2 MMbd in 2010.

In 2010, the U.S. imported 11.8 million barrels per day (MMbd) of crude oil and refined petroleum products. The U.S., however, also exported 2.3 MMbd of crude oil and petroleum products during 2010, so net imports (imports minus exports) equaled 9.4 MMbd, EIA noted.

Petroleum products imported by the United States during 2010 included gasoline, diesel fuel, heating oil, jet fuel, chemical feedstocks, asphalt, and other products. Still, most petroleum products consumed in the United States were refined here. Net imports of petroleum other than crude oil were 2 percent of the petroleum consumed in the United States during 2010, according to EIA.

About Half of U.S. Petroleum Imports from Western Hemisphere

Of the total crude oil and petroleum product imports, 49 percent came from the Western Hemisphere (North, South, and Central America, and the Caribbean including U.S. territories) during 2010. About 18 percent of U.S. crude and imports of crude oil and petroleum products come from the Persian Gulf countries of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates. The U.S.' largest sources of net crude oil and petroleum product imports were Canada and Saudi Arabia, EIA said.

Reliance on Petroleum Imports has Declined

U.S. dependence on imported oil has dramatically declined since peaking in 2005, EIA emphasized.

"This trend is the result of a variety of factors including a decline in consumption and shifts in supply patterns," EIA said, continuing: "The economic downturn after the financial crisis of 2008, improvements in efficiency, changes in consumer behavior and patterns of economic growth, all contributed to the decline in petroleum consumption. At the same time, increased use of domestic biofuels (ethanol and biodiesel), and strong gains in domestic production of crude oil and natural gas plant liquids expanded domestic supplies and reduced the need for imports."

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Commodity Corner: Oil Gets Boost from EIA, Bernanke

- Commodity Corner: Oil Gets Boost from EIA, Bernanke

Wednesday, July 13, 2011
Rigzone Staff
y Matthew V. Veazey

Oil futures received a boost Wednesday from the latest inventory data from the U.S. Energy Information Administration as well as testimony by Federal Reserve Chairman Ben Bernanke. The WTI benchmark on the New York Mercantile Exchange gained 62 cents to settle at $98.05 a barrel. Brent futures, meanwhile, rose $1.03 to end the day at $118.78 a barrel.

The EIA reported that U.S. commercial crude oil inventories declined sharply last week. According to the agency, oil stocks fell by 0.9 percent to 355.5 million barrels. The 3.1 million barrel week-on-week decline exceeded analysts' expectations. A panel of analysts surveyed by Platts, for instance, predicted a relatively modest 2.1 million-barrel draw.

Testifying before a U.S. House panel Wednesday, Bernanke hinted that the central bank may initiate a third attempt to stimulate the economy by printing more money to buy Treasury bonds. This "quantitative easing" monetary policy approach is designed to improve liquidity in the economy by enticing banks to make more loans to businesses and consumers. A third round of quantitative easing, or "QE3," would be bullish for oil because the Fed would weaken the value of the U.S. dollar by making money more widely available to banks. For investors holding currencies other than the greenback, dollar-denominated crude oil would become a better value.

The WTI peaked at $99.21 and bottomed out at $96.53 while Brent futures fluctuated from $117.01 to $119.50.

Front-month natural gas gained seven cents to settle at $4.40 per thousand cubic feet. Sizzling temperatures extending from the Midwest to the East Coast, with more to come beginning this weekend after a brief respite, have boosted cooling demand.

The intraday range for natural gas during midweek trading was $4.31 to $4.42.

Gasoline futures rose by a nickel to end the day at $3.15 a gallon. The commodity traded within a range from $3.08 to $3.175.

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EIA: Higher US Gas Production Expected for 2011

- EIA: Higher US Gas Production Expected for 2011

Tuesday, July 12, 2011
Dow Jones Newswires
NEW YORK
by Amy D'Onofrio

The U.S. Energy Information Administration raised its forecast for natural-gas production for 2011, and said inventories are expected to come close to last year's record levels this fall.

The EIA also expects demand for gas to be slightly stronger than previously expected.

U.S. gas production is expected to average 65.4 billion cubic feet a day in 2011, up 5.8% from last year. The forecast was up from last month's prediction of 4.5% growth in output, according to the agency's monthly Short Term Energy Outlook released Tuesday.

"Growing domestic natural gas production has reduced reliance on natural gas imports and contributed to increased exports," the EIA said.

That increase in production is partly due to drilling to access gas in shale rock formations, where output has shot up in recent years.

Pipeline gross exports to Mexico and Canada are expected to average 4.2 Bcf/d in 2011, up from 3.1 Bcf/d in 2010, while liquefied natural gas imports are seen falling to 1 Bcf/d, from 1.2 Bcf/d in 2010, the agency said.

Production continues to grow faster than consumption. Total gas consumption is forecast to increase by 2% in 2011 to 67.4 billion cubic feet a day, on higher demand from industrial and electric power consumers.

Consumption is expected to drop slightly in 2012 to 67.3 billion cubic feet a day. The EIA expects residential and commercial consumption to decline because cooler weather is expected in the Midwest and West, the EIA said.

Natural-gas prices at the benchmark Henry Hub should average $4.26 per million British thermal units over the second half of 2011, "as the inventory deficit relative to last year narrows," the EIA said. In June, prices averaged $4.54, or 34 cents higher than the forecast last month.

Uncertainty over natural gas prices is still lower this year compared with the same time last year, the statistical arm of the Department of Energy said.

Gas prices will likely come under downward pressure as inventories rise during the summer months, but prices are expected to average $4.54 in 2012 as production growth slows.

This year, inventories should remain high, however.

Inventories are forecast to surpass 3.8 trillion cubic feet at the end of October "because of current high production rates and a milder summer relative to last year," according to the report.

Copyright (c) 2011 Dow Jones & Company, Inc.

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EIA Deems Shale Gas 'Global Phenomenon'

EIA Deems Shale Gas 'Global Phenomenon'

Wednesday, April 06, 2011

Energy Information Administration

Initial assessments of 48 shale gas basins in 32 countries suggest that shale gas resources, which have recently provided a major boost to U.S. natural gas production, are also available in other world regions. A new EIA-sponsored study reported initial assessments of 5,760 trillion cubic feet (Tcf) of technically recoverable shale gas resources in 32 foreign countries, compared with 862 Tcf in the United States.

In 2010, U.S. shale gas production reached 4.87 Tcf (23 percent of total U.S. natural gas production), compared with 0.39 Tcf in 2000. This shows both the rapid growth and absolute importance of the shale gas resource to the United States. Rising production from shale gas resources has been credited with both lower natural gas prices and declining dependence on imported natural gas. As is often the case with resource development, shale gas production also has raised local environmental concerns, largely centering on the amount of water used in the fracturing process and the need to handle, recycle, and treat fracturing fluids in a manner that addresses the risk of spills that can potentially affect water quality. EIA's Annual Energy Outlook 2011 Reference case also reflects the growing importance of U.S. shale gas. It projects that shale gas will account for about 46 percent of U.S. natural gas production in 2035.

Do other countries have similar opportunities to develop shale gas? To begin to address that question, EIA sponsored Advanced Resources International, Inc., to assess 48 gas shale basins in 32 countries, containing almost 70 shale gas formations. This effort has culminated in the report: World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States.

Technically recoverable natural gas resources in the assessed basins totaled 5,760 Tcf. Adding the estimated U.S. shale gas technically recoverable resources (862 Tcf) to the assessments in the study gives a total of 6,622 Tcf. For comparison, most current estimates of world technically recoverable natural gas resources include few if any of the resources assessed in this study and total about 16,000 Tcf.

"Adding identified shale gas resources to current estimates of other gas resources increases total world technically recoverable resources by over 40 percent, to more than 22,000 trillion cubic feet," said EIA Administrator Richard Newell.

Estimates of shale gas resources in other parts of the world are highly uncertain. The practicality of using such resources has only recently become apparent, and many countries are just now beginning to understand how to conduct assessments of how much shale gas they may have. Nonetheless, the aggregate estimate is probably quite conservative, since the study excluded several major types of potential shale gas resources:

• Nations outside the 32 countries studied. These include Russia and the Middle East, which have very large resources of conventional gas.
• Some shale basins in the countries studied. In many cases, no estimates are possible yet for these basins.
• Offshore resources.

Of the countries covered in the EIA-sponsored study, two groups may find shale gas development most attractive. The first is those countries that currently depend heavily on natural gas imports but that also have significant shale gas resources. These include France, Poland, Turkey, Ukraine, South Africa, Morocco, and Chile. The second group is those countries that already produce substantial amounts of natural gas and also have large shale resources. In addition to the United States, this group includes Canada, Mexico, China, Australia, Libya, Algeria, Argentina, and Brazil.