E1: Welcome to Over a Barrel!

On our first episode of Over a Barrel, we get introduced to your host, Matt McClain and Patrick De Haan, head of petroleum analysis at GasBuddy, discuss what we’ll chat about on future podcasts, current events, how GasBuddy got started, and why Patrick got hooked on fuel prices. Matt, your host, shares his background and how Patrick and Matt have remained friends long after Matt’s first assignment to talk gas prices from over a decade ago.

GAS PRICES STABILIZE AS OIL HITS $70 BEFORE BACKING OFF

For the seventh straight week, the national average price of gasoline has risen, posting a mere 0.6 cent per gallon gain from a week ago to $3.04 per gallon today according to GasBuddy data compiled from more than 11 million individual price reports covering over 150,000 gas stations across the country. The national average now stands 16.8 cents higher than a month ago and $1.17 per gallon higher than a year ago. The national average price of diesel has risen 1.6 cents in the last week and stands at $3.20 per gallon.

“We’re entering our fourth straight week with the national average above the key $3 per gallon level. While gas prices haven’t broken past the low $3s, they have also failed to decline much from their peak as demand for gasoline continues to push higher as the summer driving season is underway,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “According to GasBuddy data, gasoline demand last week eclipsed the prior week, when millions of Americans were gearing up for Memorial Day travel. It’s not an easy feat, but highlights that economic conditions are ripe for continued growth in demand, contributing to prices holding at high levels. As OPEC has maintained a slow but steady increase in oil production, that additional production is quickly being gobbled up by a recovering global economy. Our current gas prices likely won’t change much by July 4, but remain stubbornly high, barring any major curveballs to supply and demand.”

OIL PRICES
The price of a barrel of West Texas Intermediate crude oil broke the $70 per barrel mark in overnight trading, but gave up gains and was down slightly in early Monday trade. As of presstime, WTI crude was down 21 cents per barrel to $69.41, just slightly higher than last Monday’s tally of $68.85. Brent crude oil was down 22 cents to $71.67 in early Monday trade, up only slightly from last Monday’s $71.09 level. Global crude oil demand continues to grow as nations recover from the Covid-19 pandemic and life slowly returns to some sense of normal.

According to Baker Hughes, last week’s U.S. rig count fell by 1 to 456, but was 172 higher than a year ago. The Canadian rig count soared by 15 to 77, or 56 more than a year ago.

OIL AND REFINED PRODUCT INVENTORIES
Crude oil inventories plunged last week as refiners continued to ramp up operations as demand continues to rise. Crude inventories fell 5.1 million barrels and stands 3% lower than the five year average for this time of year, while domestic production fell 200,000 barrels. Gasoline inventories rose 1.5 million barrels but stands 3% lower than the five year average range for this time of year, while distillate inventories jumped 3.7 million barrels. Refinery utilization jumped to its highest level since the pandemic started, rising 1.7% to 88.7%. Implied gasoline demand fell 333,000 barrels, according to the EIA.

FUEL DEMAND
According to a new dataset being released by GasBuddy, U.S. gasoline demand continued to advance as the summer driving season gets underway. Nationally, weekly gasoline demand rose 0.2%, while demand rose 1.4% in PADD 1, fell 0.5% in PADD 2, fell 2.5% in PADD 3, rose 4.4% in PADD 4 and rose 0.4% in PADD 5.

GAS PRICE TRENDS
The most common U.S. gas price encountered by motorists was $2.89 per gallon, down 10 cents from last week, followed by $2.99, $2.79 and $3.09.
The average cost at the priciest 10% of stations stands at $4.04 per gallon, up 3 cents from a week ago, while the lowest 10% average $2.58 per gallon, unchanged from a week ago.
The median U.S. price is $2.91 per gallon, down a penny from last week and about 13 cents lower than the national average.
The states with the lowest average prices: Texas ($2.67), Louisiana ($2.68) and Mississippi ($2.69).
The states with the highest priced states: California ($4.20), Hawaii ($3.90) and Nevada ($3.65).

OIL INVENTORIES DROP AS REFINERS CHURN OUT PRODUCTS

The Energy Information Administration (EIA) released its weekly report today on the status of petroleum inventories in the United States. Here are some highlights:

CRUDE OIL INVENTORIES:
Crude oil inventories decreased by 5.1 million barrels (MMbbl) to a total of 479.3 MMbbl. At 479.3 MMbbl, inventories are 53.1 MMbbl below last year (10.0%) and are about 3% below the five-year average for this time of year. Inventories in Cushing, OK, the NYMEX delivery point, rose 0.7 million barrels to a total of 45.5 million barrels.

CRUDE OIL PRODUCTION:
Domestic crude oil production fell 200,000bpd to 11.0 million barrels per day, 400,000 bpd lower than the year ago period. While Alaska oil production fell 8,000 barrels per day to 440,000bpd, production in the Lower 48 fell 200,000 bpd to 10.4 million barrels per day.

GASOLINE INVENTORIES:
Gasoline inventories increased by 1.5 million barrels (MMbbl) to a total of 234.0 MMbbl. At 234.0 MMbbl, inventories are down 23.8 MMbbl, or 9.2% lower than a year ago and are about 3% lower than the five-year average for this time of year.

Here’s how individual regions and their gasoline inventory fared:

East Coast (+2.0 MMbbl)
Midwest (-0.2 MMbbl)
Gulf Coast (-0.4 MMbbl)
Rockies (-0.2 MMbbl)
West Coast (+0.2 MMbbl)
It’s important to note which regions saw increases/decreases as this information likely drives prices up (in the case of falling inventories) or down (in the case of rising inventories).

DISTILLATE (DIESEL, HEATING OIL) INVENTORIES:
Distillate inventories increased by 3.7 million barrels to a total of 132.8 MMbbl. At 132.8 MMbbl, inventories are down 41.5 MMbbl, or 23.8% lower vs. a year ago. Distillate inventories stand about 8% below the five-year average for this time of year.

IMPLIED GASOLINE DEMAND:
Gasoline supplied to the market amounted to 9.15 million barrels per day (MMbpd), or 333,000 bpd lower than the previous week. So far in 2021, implied demand (“products supplied”) is 10.0% higher versus 2020, per the EIA.

REFINERY OUTPUT/UTILIZATION:
Refinery utilization increased by 1.7% vs. last week’s numbers to reach 88.7%. Gasoline production decreased to 9.6 million barrels per day while distillate fuel production increased to 4.8 million barrels per day last week.

Utilization rates for the last week were as follows:

East Coast: 87.9% (-2.1%)
Midwest: 91.5% (+3.8%)
Gulf Coast: 89.7% (+1.4%)
Rocky Mountains: 78.4% (+1.6%)
West Coast: 83.8% (+0.7%)
These percentages show how much of a region’s overall capacity was used to refine oil. It’s important to note these percentages, because the lower the utilization percent, the lower output — which has a direct impact on local gasoline prices. If refiners in your region have low output, you’re more likely to see gas prices rise.

OVERALL SUPPLY:
Total oil stocks in the United States are down by 152.1 MMbbl (-10.6%) versus a year ago and stand at 1.278 billion barrels (excluding the Strategic Petroleum Reserve).

IMPORTS/EXPORTS:
The U.S. imported 5.63 MMbpd of crude oil per day last week, down by 641,000 bpd vs. the previous week, while crude oil exports fell 889,000 bpd to 2.54 MMbpd. Total motor gasoline imports last week averaged 933,000 bpd. The U.S. also imported 516,000 bpd of distillate fuels. However, during the same timeframe, the U.S. exported 560,000 bpd of finished gasoline and 978,000 bpd of distillates. In total, U.S. companies exported 7.18 MMbpd of oil and petroleum products.

Before the report was released, the price of West Texas Intermediate crude oil was up 9 cents to $68.92 per barrel. Just after the report was released, oil was up 33 cents per barrel.

GAS PRICES HOLD GROUND AS DEMAND SURGES

For the sixth straight week, the national average price of gasoline has risen, posting a 0.6 cent per gallon gain from a week ago to $3.04 per gallon today according to GasBuddy data compiled from more than 11 million individual price reports covering over 150,000 gas stations across the country. The national average now stands 16.8 cents higher than a month ago and $1.17 per gallon higher than a year ago. The national average price of diesel has risen 1.2 cents in the last week and stands at $3.18 per gallon.

“With the summer driving season now officially begun, gas prices have clung to a $3 per gallon average on continued strong demand as Americans take to the roads amidst a continued economic recovery,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “Through Sunday, U.S. gasoline demand was very strong over the weekend, with Friday and Sunday both setting new Covid records for gasoline consumption for their respective day of week, according to GasBuddy data. While gasoline demand continues to recover, oil production has only slowly started gaining momentum after a very challenging 2020 forced oil companies to take several steps backward as prices and demand plummeted last year. While oil production is now moving in the right direction, we’re in catch up mode to searing hot gasoline demand, and the imbalance has pushed prices up notably. For now, there’s little chance of a backslide in gas prices, but a larger chance that this summer could boast near-record gasoline demand as Americans hit the road, but remain mostly stuck to the U.S. due to overseas travel challenges that persist.”

OIL PRICES
The price of a barrel of West Texas Intermediate crude oil was sharply higher in early trade Tuesday, reaching nearly $69 per barrel, the highest since 2018 on strong Memorial Day demand in the United States, up from $64.72 per barrel a week ago. Brent crude oil eclipsed the $70 per barrel mark, last trading at $71.09, up nearly 2.5%. Oil’s rebound remains strong as the global economy rebounds and Covid cases slow, buoyed by lofty expectations that the summer driving season in the world’s biggest consumer, the United States, will return close to normal or exceed normal.

The rig count in the U.S. has continued to climb, according to tracker Baker Hughes, with 2 new rigs in service, bringing the count to 457, or 156 higher than a year ago. Canada added 4 rigs to a total of 62, or 42 higher than a year ago.

OIL AND REFINED PRODUCT INVENTORIES
Crude oil inventories fell a typical 1.7 million barrels as the country begins the summer driving season, with oil inventories now about 2% below the five year average for this time of year. Oil production was unchanged at 11 million barrels per day, or 2.2 million barrels lower than the pre-Covid peak. Gasoline inventories fell 1.7 million barrels and stand nearly 9% below normal, while distillate inventories fell 3 million barrels to 21.4% lower than last year. The good news was that refinery utilization continues to increase as refiners respond to higher demand, with utilization up 0.7% to 87%, led higher by improvements in PADD 1 and 2 refineries. Total U.S. oil inventories are down about 10% from last year’s Covid-induced surge in inventories as consumers parked their vehicles.

FUEL DEMAND
According to a new dataset being released by GasBuddy, U.S. gasoline demand was up on strong demand ahead of the Memorial Day weekend. Nationally, gasoline demand rose 9.4%, while demand rose 15.5% in PADD 1, rose 5.3% in PADD 2, rose 10.8% in PADD 3, rose 7.5% in PADD 4 and rose 3.3% in PADD 5.

GAS PRICE TRENDS
The most common U.S. gas price encountered by motorists was $2.99 per gallon, up 10 cents from last week, followed by $2.89, $2.79 and $3.09.
The average cost at the priciest 10% of stations stands at $4.01 per gallon, up 3 cents from a week ago, while the lowest 10% average $2.58 per gallon, down 5 cents from a week ago.
The median U.S. price is $2.92 per gallon, up 1 cent from last week and about 12 cents lower than the national average.
The states with the lowest average prices: Oklahoma ($2.68), Louisiana ($2.68) and Mississippi ($2.69).
The states with the highest priced states: California ($4.19), Hawaii ($3.90) and Nevada ($3.63).