Oil Stocks Crashing as Fuel Consumption Flatlines

 Here is the article. 

What I learn:

1. 1 million barrels per day - U.S. refinery production slipped - produce less than 1 million per barrells per day
2. 9 million barrels per day
3. MTDR, AR, RRC, SWN - those are too small to purchase, too volatile 

Shares of a broad array of oil stocks are falling sharply today, following the latest weekly petroleum data survey from the U.S. Energy Information Administration. According to the latest update, U.S. refinery production slipped almost 1 million barrels per day, while gasoline consumption, as measured by the amount refiners supplied to the market, remain stuck in a narrow band close to 9 million barrels per day.

As a result of the continued lag in a further recovery of transportation fuel demand, producer stocks in particular are taking it on the chin. At this writing, shares of Matador Resources (NYSE:MTDR), Antero Resources (NYSE:AR), Range Resources (NYSE:RRC), and Southwestern Energy (NYSE:SWN) are down between 5.3% and 8% (even though they are more focused on natural gas than oil).

My notes:

1. U.S. commercial crude storage is still 14% higher than the five-year average - Google, and try to make sense -
2. gasoline and distillate inventories are 13% above the year-ago level - Google, and see if I should check those numbers 

Oil recovery stuck in neutral

Each week the EIA releases a report that shows important import, commercial storage, and refinery statistics. On the good side of the report, U.S. commercial crude oil inventories fell 9.4 million barrels from the prior week, and imports fell to 4.9 million barrels per day, about 1 million less than the week before. This, on the surface, is a positive for the industry, which has been dealing with a massive glut of excess inventory that continues to weigh on oil producers and prices. 

Yet even with that move in the right direction, U.S. commercial crude storage is still 14% higher than the five-year average, while gasoline and distillate inventories are 13% above the year-ago level. 

My notes:

1. Less driving, and less air travel - demand is too low
2. 
   

The biggest thing holding the industry back right now is the lack of further recovery in oil demand. U.S. refiners supplied 8.9 million barrels per day last week, and 3.7 million barrels of distillate, down 9% and 16% respectively from last year's levels, and roughly flat for the past two months. The overhang of the coronavirus pandemic continues to weigh on the transportation sector, particularly automobiles. Millions of Americans continue to work from home, and the peak driving season is coming to an end, with a minimal boost from vacationers eschewing air travel and driving somewhere for leisure instead. 

My notes

1. peak summer driving season comes to an end
2. coronavirus pandemic continues
3. the fortune of oil hedges starts to roll off

Winter is coming

As the peak summer driving season comes to an end and the coronavirus pandemic continues to weigh on oil demand, oil traders are turning decidedly bearish on the prospects of a quick recovery. Many U.S. producers have had the fortune of oil hedges that have helped them realize much higher prices than the benchmarks, but those hedges are already starting to roll off, resulting in even more oil production that's not profitable below $40 per barrel.