Data: Natural Gas Stores Rise, But Oil Reserves Fall

Oil

The Energy Information Administration released its weekly reports on the status of various liquid fuels in the United States, covering the week that ended September 13. The reports include natural gas and petroleum, presenting data about the production, storage, and prices of the fuels.

Changes in the data can reflect natural variations, seasonal trends, long-term market effects, and current events in regions of the globe where liquid fuels are produced, processed, and sold. This week was highlighted by tension over the production levels of oil from Middle Eastern countries including Iran, while tension began to lessen over Syria.

Working natural gas in storage — the volume readily available to the market — increased by 46 billion cubic feet in the week ended September 13 to 3,299 Bcf, according to EIA estimates. This is down by 187 Bcf from the same period last year and within a standard range taken from 5-year averages. As of Thursday, futures traded at $3.713/mmBTU, up nearly 15 cents on the week but still below the $4 to $6 range within which producers can both earn a profit remain and compete with alternative fuels such as coal.

The data shows a trend has developed over the past few years. Inventories have been on the rise as domestic production increases, largely thanks to advances in horizontal drilling and hydraulic fracturing technology.

These advances have contributed to a revolution in energy production in the U.S. and producers are rapidly helping make the dream of energy independence come true.

Domestic production supplied the U.S. with 84 percent of its total energy needs in 2012, the highest level since 1991. The EIA estimates that the U.S. could become a net exporter of natural gas as early as 2020, assuming regulatory hurdles can be overcome.

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U.S. crude oil refinery inputs averaged about 16.1 million barrels per day during the week ending September 13, 2013 with refineries operating at 92.5 percent capacity. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.4 million barrels from the previous week.

At 355.6 million barrels, U.S. crude oil inventories are approximately within the average range for this time of year. The drop in the crude oil reserves, which was larger than many people had expected, served as a driver for prices of crude oil futures. WTI — a grade of crude oil used as a benchmark in oil pricing — was $110.53 per barrel, $2.88 more than last week’s price and $15.00 more than a year ago.

Many are concerned about the price of oil because of tension in the Middle East, including the recent debacle over a potential military strike in Syria. This week, crude oil prices were dramatically impacted by the Fed’s decision not to start the tapering of quantitative easing, with a sharp gain followed by a gradual decline as panic gave way to the voices of reason. The spike is sure to be reflected in the oil numbers from this week.

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As the EIA put it, “All else equal, changes in gasoline prices follow changes in crude prices.” For the week ended September 13, the average retail price of a gallon of gasoline in the U.S. was $3.494. This is down 35 cents from the year-ago period, and down a fraction from the previous week. It is also down from the summer-to-date peak of $3.68, which was hit on July 22.

Earlier in August, the EIA projected that oil and gas prices would decline throughout 2014 — with regular gasoline approaching $3.00 per gallon by the end of the year. Thanks to increased production in the U.S. and other non-OPEC countries, prices could very well still continue to decline after some of the dust has settled over Syria.

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