“Davidson” submits:
Every week wild headlines accompany the EIA weekly US crude oil report. Too much, too little with some issuing a dire expectation in one direction vs another. The facts remain that US Working Crude Inventory has remained close to the trend from 2003 as shown in the 1st chart. I take this as a comfortable level to deal with weather related and geopolitical disruptions developed by industry experience. This trend also incorporates the volatile expectations of traders we see week/week and month/month. There are two noted periods of excess inventory, one when speculators built storage during the panic of “Peak Oil” and then had to gradually work off this excess that “Peak Oil” never proved valid, and the second time was the COVID lockdown which proved later as not needed.
The 2nd chart shows US crude production vs the Baker Hughes Rig Count from July 2018 to present. It reveals we are not seeing “drill baby drill” as the working crude inventories are where they should be for efficient supply . US Crude Production has been in a steady uptrend since COVID but lower than pre-COVID as natural gas has replaced crude demand. Note further that the rig count vs production has fallen sharply as drillling efficiencies have improved well output significantly. There are 150 fewer rigs at work today vs Dec 2022 but production has moved from 13.2mil BBL/Day to 13.6mil BBL/Day. This calculation uses the reported weekly US Crude Production with the Fudge Factor the EIA applies to numbers that don’t add up, meaning that small stripper wells add to the system that are not counted in the official production from larger producers. The 1st chart reveals that the new administration is not rebuilding the Strategic Petroleum Reserve any faster than the end of the last administration.
Steady as you go.