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A key analysis of propane inventories this week
In the week of November 14, US propane inventories increased by ~99 thousand barrels to ~81.15 million barrels.
The EIA projects a 4.8% year-over-year increase in total marketed natural gas production to around 73.79 bcf/d in 2014.
Natural gas prices started the week on a strong note following cold weather forecasts in the days to come.
The US added 2,789 bcf of natural gas to storage in the 2014 injection season. This is significantly higher than the 2,131 bcf injection last year.
Natural gas consumption in the US is very seasonal. Consumption is highest in the winter when heating demands are at their highest.
Weakness in crude prices does not bode well for profits of major oil producing companies like ConocoPhillips, Occidental Petroleum, and EOG Resources.
Crude stocks at Cushing increased by 718,000 barrels to ~23.25 MMbbls (million barrels) in the week ended November 14.
Distillate stocks decreased by 2.1 MMbbls (million barrels) last week versus analysts’ expectation for inventories to decrease between 1.4 and 2 MMbbls.
Last week, gasoline inventories increased by 1 MMbbls (million barrels) to 204.6 MMbbls.
US crude oil refinery inputs averaged 15.9 million bpd during the week ending November 14, 161,000 bpd higher than the previous week’s average.
Analysts were expecting a crude inventory draw of ~1 million barrels, but inventories instead increased by 2.6 MMbbls.
Crude oil inventory levels change based on demand and supply trends. Demand is primarily from refineries that process this crude into refined products.
While Walter Energy has tried to optimize its controllable factors, the macro environment looks bleak.
In spite of better-than-expected earnings, Walter Energy stock fell 1% on October 30 to $2.28 as analysts issued a warning that the company might be overspending.
Walter Energy issued $320 million in first lien notes in July 2014, primarily to boost liquidity.
Walter Energy has 1.7 million tons of met coal inventory. The company expects to dispose of 1.1 million tons to earn around $75 million by the end of 1Q15.
While Walter Energy (WLT) has been able to reduce costs, the cost savings have not been able to compensate for the drop in revenues.
All major met coal producers are trying to curtail cost of production amid the difficult industry environment. Walter Energy (WLT) is not an exception.
Walter Energy’s 3Q14 production was lower than in 3Q13, as the company curtailed production owing to difficult industry conditions.
Walter Energy’s US operations include underground and surface mines, coke plants, and natural gas operations.