Analysis of Some Fundamentals of Price of Crude Oil (WTI) in the US

by Eduardo Petazze
Last Updated: May 10, 2015
Facts inventory of crude oil and active rigs in the US, are commonly used to explain (speculative) movements in crude oil prices.
The paper analyzes these data, under a longer term perspective, in order to limit the impact that such information is given for explaining the
volatility of prices in the international market.
The aim of this working paper is to review and clarify the underlying data of two fundamentals commonly used to explain the movements in the
price of crude oil in the US, in a global context of over-supply of oil.
For an analysis of projected global demand and supply of crude oil, underlying global oil oversupply see: World Crude Oil Market Speculative Projection for 2017

First, is often mentioned the number of rigs in activity as a leading indicator that oil production from the US stop growing at significant rate has
acquired through the development of oil and gas reserves of shale .
The following table, based on data collected by Baker Hughes on number of active drilling rigs, and our own estimates, shows the impact of
low prices of crude oil in the total amount of active devices, primarily in Canada and the USA
WORLDWIDE RIG COUNT
8.5
36.7
$43.19
Canada
US Rigs per
WTI $/bl
Rigs per 1.0
1.0 $/bl
$/bl
8.8
82.6
$29.41
11.1
70.8
$27.91
11.9
64.5
$15.02
9.5
48.9
$19.14
12.3
58.7
$15.96
6.6
44.4
$19.59
5.6
41.1
$24.50
5.7
40.1
$21.46
4.7
34.9
$20.57
10.0
40.7
$18.48
15.1
45.1
$17.18
12.5
39.3
$18.40
12.3
35.3
$22.01
18.2
45.8
$20.61
18.0
57.4
$14.43
12.8
32.4
$19.24
11.4
30.3
$30.20
13.2
44.6
$25.90
10.2
31.9
$26.08
12.0
33.2
$31.04
8.9
28.7
$41.40
8.1
24.4
$56.56
7.1
24.9
$66.22
4.8
24.4
$72.31
3.8
18.8
$99.65
3.6
17.6
$61.80
4.4
19.4
$79.53
4.4
19.7
$95.12
3.9
20.4
$94.21
3.6
18.0
$97.97
4.1
20.0
$93.00
3.8
21.5
$57.23
2.8
16.8
$63.48
Latest data
WTI futures contracts
Canada
US Rigs per
Rigs per 1.0
WTI $/bl
1.0 $/bl
$/bl
5.7
19.3
102.93
1.8
21.1
93.49
3.5
20.7
92.22
4.2
20.5
88.18
5.7
18.6
94.37
1.6
18.7
94.22
3.3
16.7
105.83
3.9
18.0
97.46
5.3
18.0
98.68
2.0
18.0
103.00
4.0
19.6
97.17
5.6
26.1
73.15
6.4
28.4
48.54
1.5
16.9
57.75
3.3
20.1
60.81
4.3
21.7
61.80
4.3
19.6
62.68
Latest data
WTI futures contracts
Canada
US Rigs per
Rigs per 1.0
WTI $/bl
1.0 $/bl
$/bl
5.3
18.6
$94.86
6.2
17.6
$100.68
4.5
17.9
$100.51
2.0
18.0
$102.04
1.6
18.3
$101.80
2.3
17.7
$105.15
3.4
18.3
$102.39
4.2
19.8
$96.08
4.4
20.7
$93.03
5.0
22.8
$84.34
5.6
25.4
$75.81
6.3
31.7
$59.29
7.8
35.6
$47.22
7.2
26.7
$50.58
4.1
23.2
$47.82
1.7
18.0
$54.21
1.3
14.9
$59.58
1.7
17.8
$59.47
2.6
19.3
$60.47
3.4
20.3
$60.83
3.8
20.8
$61.13
Latest data
Own estimate
WTI futures contracts

L-T avg
NSA

334

131

101

218

226

Latin
Europe
America

Africa

Middle
East

Asia
Pacific

197
200
179
151
167
161
137
118
153
158
126
128
136
159
166
140
156
179
201
211
230
248
238
265
280
252
265
291
356
372
406
423
440

285
283
246
247
267
271
274
261
243
232
204
181
176
180
173
139
140
157
171
177
197
225
228
241
252
243
269
256
241
246
254
240
234

Middle
East

Asia
Pacific

311
343
390
378
355
368
373
392
400
415
411
399
412
427
432
419
430

250
241
230
242
245
252
241
245
258
249
256
254
235
236
246
245
233

Middle
East

Asia
Pacific

403
396
401
407
414
425
432
406
396
390
403
403
415
415
407
410
433
437
444
431
422

256
259
258
252
243
251
253
255
260
252
255
255
232
240
233
228
238
241
244
245
248

1984
438
203
106
1985
444
231
118
1986
369
183
96
1987
337
153
91
1988
335
169
93
1989
257
148
83
1990
246
158
91
1991
275
166
90
1992
250
134
77
1993
203
112
69
1994
233
107
65
1995
272
112
66
1996
282
120
79
1997
277
113
80
1998
243
99
74
1999
187
81
42
2000
227
83
46
2001
262
95
53
2002
214
88
58
2003
244
83
54
2004
290
70
48
2005
316
70
50
2006
324
77
58
2007
355
78
66
2008
384
98
65
2009
356
84
62
2010
383
94
83
2011
424
118
78
2012
423
119
96
2013
419
135
125
2014
397
145
134
2015
348
136
125
2016
311
131
120
Latest data Source: Baker Hughes
Own estimate
NSA

Latin
Europe
America

Africa

2012Q1
432
112
83
2012Q2
438
117
90
2012Q3
414
117
108
2012Q4
408
129
103
2013Q1
426
134
114
2013Q2
425
133
127
2013Q3
407
140
124
2013Q4
416
133
135
2014Q1
402
135
142
2014Q2
402
149
133
2014Q3
406
148
126
2014Q4
379
148
135
2015Q1
352
132
130
2015Q2
342
129
124
2015Q3
358
141
122
2015Q4
340
141
125
2016Q1
316
129
125
Latest data Source: Baker Hughes
Own estimate
NSA

Latin
Europe
America

Africa

Jan-14
401
126
139
Feb-14
400
132
154
Mar-14
406
148
132
Apr-14
403
151
136
May-14
404
149
140
Jun-14
398
147
123
Jul-14
407
153
137
Aug-14
410
143
125
Sep-14
402
148
117
Oct-14
393
148
125
Nov-14
375
149
142
Dec-14
369
148
138
Jan-15
351
128
132
Feb-15
355
133
132
Mar-15
351
135
125
Apr-15
325
119
120
May-15
351
133
130
Jun-15
350
136
122
Jul-15
358
142
128
Aug-15
360
139
122
Sep-15
356
141
116
Latest data
Based on the first weeks of the month
Own estimate

1,010

271

1,472

2,752

Total
Canada
Intl.

U.S.

Total
World

259
311
178
181
196
130
138
121
96
185
259
230
271
375
260
246
344
342
266
372
369
458
470
344
379
221
351
423
365
355
380
217
178

2,429
1,976
970
937
937
870
1,008
862
718
753
774
724
777
944
829
622
916
1,155
831
1,032
1,190
1,380
1,648
1,767
1,878
1,086
1,541
1,875
1,919
1,761
1,862
1,230
1,066

3,917
3,562
2,220
2,097
2,164
1,919
2,052
1,892
1,671
1,711
1,767
1,712
1,841
2,128
1,843
1,457
1,913
2,242
1,829
2,174
2,395
2,746
3,043
3,116
3,336
2,304
2,985
3,465
3,518
3,412
3,578
2,718
2,480

Total
Canada
Intl.

U.S.

Total
World

592
173
326
368
536
155
349
378
526
202
385
407
309
89
200
269
268

1,991
1,970
1,906
1,809
1,758
1,761
1,769
1,757
1,780
1,852
1,903
1,911
1,380
975
1,223
1,341
1,231

3,771
3,372
3,491
3,436
3,569
3,221
3,403
3,456
3,644
3,401
3,636
3,632
2,950
2,321
2,722
2,879
2,732

Total
Canada
Intl.

U.S.

Total
World

1,769
1,769
1,803
1,835
1,859
1,861
1,876
1,904
1,930
1,925
1,925
1,882
1,682
1,348
1,110
976
890
1,058
1,165
1,232
1,273

3,598
3,736
3,597
3,388
3,371
3,445
3,608
3,642
3,659
3,657
3,670
3,570
3,308
2,986
2,557
2,268
2,249
2,445
2,640
2,736
2,790

1,228
1,276
1,072
980
1,032
920
907
909
857
773
734
759
793
809
755
588
652
745
732
771
836
908
925
1,005
1,079
997
1,094
1,167
1,234
1,296
1,337
1,272
1,236

1,189
1,229
1,260
1,260
1,274
1,306
1,285
1,320
1,337
1,348
1,348
1,315
1,261
1,258
1,299
1,269
1,234

1,325
1,341
1,345
1,349
1,350
1,344
1,382
1,339
1,323
1,308
1,324
1,313
1,258
1,275
1,251
1,202
1,285
1,286
1,316
1,297
1,283

504
626
449
204
162
240
350
399
406
424
421
375
368
363
196
90
75
101
159
207
234

Second, the argument of increased commercial crude oil inventories in the US.
The following table, based on data from the US EIA in the Weekly Petroleum Status Report shows, in addition to the raw data, trend and
seasonally adjusted crude oil inventory, as number of days of net oil processed by US refineries.
You can see an upward trend in the number of days of inventory, an effect of increased levels of domestic production, which necessarily
includes the expansion of tankage in fields, headers and pipeline terminals and other facilities. The historical average 1982 / 2017
(projected), the average inventory is equal to 23.6 days oil local processing.
US Commercial Oil Stock - (000) US Net crude oil refining barrels
(000) bl/d
Week
4-week avg.
Week 4-week avg.
360,567
368,923
16,247
16,136
358,085
354,297
15,049
15,353
363,822
362,473
15,212
15,226
380,092
377,104
15,315
15,086
399,357
393,818
15,954
15,721
397,576
397,182
15,904
15,863
398,523
398,279
15,667
15,876
391,297
396,688
15,949
15,869
392,954
395,088
15,851
15,843
389,523
393,074
16,057
15,881
384,935
386,575
16,218
15,709
365,618
369,776
16,393
16,542
359,570
362,402
16,428
16,401
356,635
358,876
15,689
16,135
380,205
377,052
15,485
15,286
379,335
380,477
16,356
15,995
382,393
383,750
16,420
16,360
413,060
401,356
15,544
15,401
444,374
430,504
15,113
15,341
471,444
461,379
15,728
15,499
482,393
469,756
15,929
15,656
483,687
476,051
16,212
15,850
489,002
481,632
15,982
15,963
490,912
486,499
16,100
16,056
487,030
487,658
16,347
16,160
483,833
487,694
15,827
16,064
481,736
485,878
15,677
15,988
480,689
483,322
15,957
15,952
476,872
480,783
16,507
15,992
462,969
467,706
16,837
16,795
454,964
457,665
16,717
16,690
450,836
452,837
15,967
16,417
461,738
458,239
15,397
15,572
461,650
461,213
16,227
16,050
459,053
460,559
16,627
16,267
459,215
459,206
16,647
16,680
465,050
462,676
15,807
15,662
338,085
14,301
.
Latest data Seasonally adjusted is our own estimate
Own estimate

Commercial Oil Stocks in Days of Refiner Input

NSA
Seasonally
Date
Week 4-week avg adjusted
Dec 27, 13
22.2
22.9
24.0
Jan 31, 14
23.8
23.1
23.5
Feb 28, 14
23.9
23.8
22.4
Mar 28, 14
24.8
25.0
23.3
Apr 25, 14
25.0
25.1
23.1
May 2, 14
25.0
25.0
23.6
May 9, 14
25.4
25.1
23.7
May 16, 14
24.5
25.0
23.1
May 23, 14
24.8
24.9
23.3
May 30, 14
24.3
24.8
23.6
Jun 27, 14
23.7
24.6
24.2
Aug 1, 14
22.3
22.4
23.7
Aug 29, 14
21.9
22.1
23.2
Sep 26, 14
22.7
22.2
23.1
Oct 31, 14
24.6
24.7
24.4
Nov 28, 14
23.2
23.8
24.0
Jan 2, 15
23.3
23.5
24.1
Jan 30, 15
26.6
26.1
25.5
Feb 27, 15
29.4
28.1
27.6
Mar 27, 15
30.0
29.8
27.9
Apr 3, 15
30.3
30.0
28.3
Apr 10, 15
29.8
30.0
27.7
Apr 17, 15
30.6
30.2
28.3
Apr 24, 15
30.5
30.3
28.4
May 1, 15
29.8
30.2
28.4
May 8, 15
30.6
30.4
28.8
May 15, 15
30.7
30.4
29.6
May 22, 15
30.1
30.3
29.2
May 29, 15
28.9
30.1
28.7
Jun 26, 15
27.5
27.8
28.2
Jul 31, 15
27.2
27.4
28.5
Aug 28, 15
28.2
27.6
29.0
Sep 25, 15
30.0
29.4
30.6
Oct 23, 15
28.4
28.7
29.0
Oct 30, 15
27.6
28.3
28.8
Nov 27, 15
27.6
27.5
28.7
Jan 1, 16
29.4
29.5
29.8
Long-Term Avg. 23.6

Addendum: Impact on US Fixed Investment

It is estimated that US fixed investment in O&G Exploration and Production was reduced by 36.6% in 2015

bn USD

Fixed Investment - Mining exploration, shafts, & wells

Other
US Rrig O&G investment per
Total
O&G
YoY
Mining
Count
Rig (in million USD)
22.3
21.2
0.95%
1.1
829
25.6
18.3
17.3
-18.40%
1.0
622
27.8
23.7
22.4
29.48%
1.3
916
24.4
34.6
33.3
48.66%
1.3
1,155
28.8
30.2
28.0
-15.92%
2.3
831
33.7
38.5
36.4
30.00%
2.1
1,032
35.3
47.3
43.7
20.05%
3.6
1,190
36.7
69.4
64.4
47.37%
5.0
1,380
46.7
96.0
88.0
36.65%
8.0
1,648
53.4
102.2
94.9
7.84%
7.4
1,767
53.7
117.0
110.1
16.02%
6.9
1,878
58.6
75.0
69.4
-36.97%
5.6
1,086
63.9
86.2
79.6
14.70%
6.6
1,541
51.7
112.3
101.5
27.51%
10.8
1,875
54.1
133.1
122.6
20.79%
10.5
1,919
63.9
139.7
130.1
6.12%
9.6
1,761
73.9
153.9
145.0
11.45%
8.9
1,862
77.9
92.0
-36.55%
1,230
74.8
72.8
-20.92%
1,066
68.2

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Latest data
Provisional data based on official data for the entire mining industry
Own estimate
Fixed Investment - Mining exploration, shafts, & wells
Other
US Rrig O&G investment per
bn USD
Total
O&G
QoQ
Mining
Count
Rig (in million USD)
2009Q1
103.4
95.9
-19.34%
7.5
1,326
72.3
2009Q2
72.5
67.1
-30.03%
5.4
936
71.7
2009Q3
61.4
56.7
-15.50%
4.7
973
58.3
2009Q4
62.6
57.7
1.76%
4.9
1,108
52.1
2010Q1
74.1
68.6
18.89%
5.5
1,345
51.0
2010Q2
85.2
78.8
14.87%
6.4
1,508
52.3
2010Q3
91.7
84.6
7.36%
7.1
1,622
52.2
2010Q4
93.8
86.2
1.89%
7.6
1,687
51.1
2011Q1
98.4
89.0
3.25%
9.4
1,716
51.9
2011Q2
106.5
96.3
8.20%
10.2
1,830
52.6
2011Q3
116.3
105.2
9.24%
11.1
1,945
54.1
2011Q4
127.8
115.5
9.79%
12.3
2,010
57.5
2012Q1
132.4
121.4
5.11%
11.0
1,991
61.0
2012Q2
136.2
125.2
3.13%
11.0
1,970
63.5
2012Q3
133.1
122.7
-2.00%
10.4
1,906
64.4
2012Q4
130.5
120.9
-1.47%
9.6
1,809
66.8
2013Q1
134.1
124.5
2.98%
9.6
1,758
70.8
2013Q2
140.8
130.9
5.14%
9.9
1,761
74.3
2013Q3
143.4
133.6
2.06%
9.8
1,769
75.5
2013Q4
140.5
131.4
-1.65%
9.1
1,757
74.8
2014Q1
145.0
136.6
3.96%
8.4
1,780
76.7
2014Q2
153.8
145.0
6.15%
8.8
1,852
78.3
2014Q3
157.0
148.0
2.07%
9.0
1,903
77.8
2014Q4
159.6
150.4
1.62%
9.2
1,911
78.7
2015Q1
133.2
124.0
-17.55%
9.2
1,380
89.9
2015Q2
76.0
-38.71%
975
78.0
2015Q3
84.0
10.53%
1,223
68.7
2015Q4
84.0
0.00%
1,341
62.6
2016Q1
83.0
-1.19%
1,231
67.4
Latest data
Provisional data based on official data for the entire mining industry
Own estimate
Also see: USA - Oil and Gas Extraction - Estimated Impact by Low Prices on Economic Aggregates