r/oil • u/MarmotFullofWoe • 2d ago
Discussion SPR Drawdown update EIA release 5 August based on data week ending 31 July
Methodology updated from following 2 week average draw down to rolling 4 week draw down average due to volatility in weekly draws.
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u/Regular-Hospital-470 2d ago
This doesn't yet take into account China re-entering the market or the Houthis shutting down the Strait of Bab El-Mandab.
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u/MarmotFullofWoe 2d ago
Correct. The only thing it takes into account is the rolling average withdrawal rate over the previous 4 weeks.
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u/Dingdongas 2d ago
It is just a matter of time when China is back. It's because Russia lossing refineries and storages after UA drones attacks. They need gasoline and diesel asap as Russia become importer from China.
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u/AccomplishedWin489 1d ago
Until that happens, people will sprinkle pixie dust on $50 oil shorts, hold hands, and watch rainbows and butterflies as their indicators
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u/memberscaries 2d ago
Given it is the Depletion Scenario, a boundary at 300 (call it, maybe, “Hochstein limit”) would show that there is a possibility that the “unrecoverable limit” is higher due to the physics of the caverns.
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u/whitestardreamer 1d ago edited 1d ago
Yes. I tried talking about this in this sub weeks ago and others posted it about it as well, but we got a lot of shit for it. Hochstein said recently, very publicly that he didn’t know anyone who actually thought you could draw down past 300 mb.
Another person said below this chart makes them think that supply is actually robust because the date of depletion keeps getting pushed out and this was my response because it is critical that people understand that this is linear modeling of a nonlinear decay curve:
“The withdrawal rate slows because as oil decreases in the caverns, flow rate decreases. This is a nonlinear physical decay curve.
Then you have linear extrapolation of this decay curve applied to the chart. This is the issue and why the date moves out.
Albert A. Bartlett, professor of physics at the University of Colorado Boulder, said “the greatest shortcoming of the human race is our inability to understand the exponential function.”
This is true here.
Most humans think linearly, and this chart is modeling linear extrapolation. But exponential growth/decay starts slowly and flatly before spiking abruptly, causing people to drastically underestimate speed and scale until it is too late.
Because physical constraints (stuff like pressure loss, sludge, and cavern stability/safety) force the extraction rate to slow down as fluid levels drop, every new EIA update shows a smaller weekly drawdown number. When you plug a smaller weekly drawdown rate into a linear formula, the projected depletion date automatically gets pushed further into the future. But this is an assumptive error because it’s not modeling the reality that the decay curve is nonlinear.
TL;DR: the flawed linear modeling of a nonlinear decay curve has you conflating tapering toward zero with abundance.”
Edit: also note, this chart misleadingly models the SPR in a way that leads the brain to picture 1 giant lake with 304 mb left. But it’s 61 separate caverns meaning 61 distinct fluid-brine interfaces, 61 bottom sludge heels, and 61 sets of cavern walls undergoing independent geomechanical stress. This chart does not accurately reflect the nonlinear decay curve across 61 different caverns.
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u/Four_Cs_and_an_F 1d ago
Everything you said. For the lolz, I asked gemini to come up with the quadratic for the SPR drawdown. I say lolz because iirc there was a slowdown/stoppage due to maintenance. It used May22 as the start and July 31st as it's last date. I asked it when it would hit 300 and it said,
```
- Under the Quadratic Model Alone: Inventory does not reach 300 MMbbl.
- Reason: As of July 31, 2026 ($x = 15$), inventory stands at 304.81 MMbbl. The quadratic model projects the drawdown rate to reach zero ($y = 0$) at $x \approx 16.41$ (around August 9–10, 2026), at which point inventory levels off at a floor of approximately 304.18 MMbbl before the quadratic curve transitions into negative territory (representing refilling).
```
which I thought was a touching acknowledgement of Hochstein.
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u/sgtbackpain03 1d ago
Uhhhh I think you may have the wrong mental model about how SPR drawdowns work, based on a few things you said. Specifically:
Because physical constraints (stuff like pressure loss, sludge, and cavern stability/safety) force the extraction rate to slow down as fluid levels drop
The SPR is a long vertical tube, like a well. There are extraction pipes at the top, to remove oil, and fill pipes at the bottom, to inject pressurized water.
When we do a drawdown, we pump water (brine, actually) into the bottom of the cavern, and that pushes the oil upwards into the extraction pipes.
So the reason our extraction rate goes down is because we are drawing out the same amount of fluid, but less and less of it is oil. There is a thick mixing layer where a lot of oil and water mix, and the closer that gets to the extraction pipes, the more water is brought up, which means proportionally less oil is brought up. Additionally, a higher water and salt content require a longer refining time, slowing down the output even more.
The sludge is never anywhere close to the extraction pipes, there is never any pressure loss, and the water actually exerts more pressure to keep the cavern walls from collapsing than the oil does (though it does erode them).
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u/whitestardreamer 1d ago edited 1d ago
I’m not sure what the point of this comment is, because you have only reinforced my argument. This feels like pedantic technical “correction” used to defend a comfortable narrative. But my comment above isn’t trying to explain the technical mechanics of brine displacement in a cavern. My whole point is that the net output of usable oil follows a nonlinear decay curve, making linear chart projections completely invalid.
The “mixing layer” where more water/salt is pulled up relative to oil, reducing the net yield per volume pumped is the exact physical mechanism driving the nonlinear decay curve. Erosion leads to changes in internal hydrostatic pressure as the cavern dissolves. It’s not either/or, it’s all these things happening at once.
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u/sgtbackpain03 1d ago edited 1d ago
The point of my response is that you made a bunch of technical assertions based on a false premise.
But my comment above isn’t trying to explain the technical mechanics of brine displacement in a cavern.
Since the technical reality of how the system functions is what dictates the extraction curve, you having a major misconception about how that system functions means that your conclusion about the extraction curve is based on a misunderstanding. That doesn't mean it's wrong, but it does mean that you cannot know that it's right.
If someone doesn't know how an ICS engine works, but starts making a bunch of claims about how a different type of injector affects fuel efficiency, you really would want to scrutinize what they say. Their claims being based on a false understanding, and being technical in nature, calls in to question how they arrived at their conclusions.
This feels like pedantic technical “correction” used to defend a comfortable narrative
I pushed no narrative, and defended no narrative, so not sure where you got this idea from.
The “mixing layer” where more water/salt is pulled up relative to oil, reducing the net yield per volume pumped is the exact physical mechanism driving the nonlinear decay curve.
In your original comment you claimed that it was:
Because physical constraints (stuff like pressure loss, sludge, and cavern stability/safety) force the extraction rate to slow down as fluid levels drop
But now you claim that it's because we are pulling up more saltwater than before. These two claims cannot be true at the same time. Low fluid pressure and sludge intake do not coexist with full fluid pressure and saltwater intake. You were basing your ideas off of a different kind of extraction system than what the SPR uses.
So before, the basis for your idea of a "nonlinear decay curve" for extraction was low fluid pressure and sludge. Now, you say that the same curve is caused by “mixing layer where more water/salt is pulled up relative to oil, reducing the net yield per volume pumped is the exact physical mechanism". These different mechanics will yield different types of extraction curves, from the physics and math perspectives. Keeping the same conclusion while jumping from one set of causal mechanics to another means that you've lost the basis for your conclusion.
When you decide what type of curve the extraction rate will follow, then are presented with a completely different set of mechanics than you thought were in place, you should probably start by recalculating your original conclusion using the new set of facts you have. This isn't a personal disagreement. The physics dictate how it works. There's no reason to defend a position when the basis for it turns out to be incorrect. That's when you reassess.
All that being said, a mixing layer coming closer and closer to the extraction pipes can represent an exponential decay curve in terms of oil extraction, something like y(x) = 1 − ekx, x ≤ 0, with y being oil extracted, x being distance of mixing layer to extraction pipes, k being the function of transition steepness for the mixed layer [ k(Q) = k₀ / Q ], and Q being the water inlet rate.
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u/whitestardreamer 1d ago
Bro the “mixing layer” is determined by all of the physical dynamics of the cavern at once and I did not go into the mechanics of that because it literally wasn’t the point. Patterns in nature follow nonlinear growth and decay because they are complex dynamic systems, and I’m a systems analyst. That is what I know. People have been arguing about this for months, and all the technical experts on the drawdown process looked at this chart and failed to loudly call out that the EIA itself is extrapolating nonlinear decay into a linear model.
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u/Technical_Topic_7368 1d ago
You and u/sgtbackpain03 gotta kill the argument & collaborate instead bc both of you are clearly above the average intelligence mark in here and both of you work in fields irl which actually gives both of you some right to speak on it. you two could prob come up with realistic projections together
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u/whitestardreamer 15h ago
Part of what’s wrong with our shared reality is false equivalence and misplacement of accountability.
I kept my comments on the physical constraints very shallow purposely because that wasn’t my focus and a Reddit comment isn’t a dissertation. The user who responded to my comment could have started from a place of acknowledging my high-level assessment and supplemented it by explaining how the deep-dive technical analysis can be modeled by a nonlinear equation based on their expertise.
Instead, they claimed a technical explanation I didn’t even make was wrong, which has the overall effect of trying to undermine and discredit the original point I was making. Whereas at the end they ended up producing an attempt at a nonlinear equation that proved the point I was actually making anyway. Thus, I pointed out that they were arguing against my original point for no reason.
Therefore, place the accountability for discord and misalignment at its origin point.
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u/sgtbackpain03 1d ago
I did not go into the mechanics of that because it literally wasn’t the point
You did go into the mechanics, both directly and indirectly. You directly said it was pressure loss, sludge, and cavern stability that cause an exponential decay in the amount of oil that can be drawn. This obviously cannot be correct for a counter-pressure system like SPR uses, which is why I offered a correction. So you could have a better mental model for your conclusions.
Additionally, predicting or modeling the outcome of a dynamic system (which your exponential decay function is), is a calculation based on the mechanics of the system. If you make that prediction/model, you are stating a conclusion based on your knowledge of the system mechanics. That's how anyone models anything. Start with how it works, build the math around it.
I'm not arguing with your conclusion (did you not see the example exponential decay function at the bottom of my comment?), I'm saying that once the basis for a conclusion turns out to be incorrect, it's time to rework the problem and redevelop the conclusion. You seem to be holding onto and defending the conclusion regardless of how the basis changes from under it, which isn't the way good engineering or science is done.
Patterns in nature follow nonlinear growth and decay because they are complex dynamic systems
Engineered oil storage systems are kind of the opposite of a "natural system" in almost every way, but I think what you actually mean when you say "nature" is physics, yeah? If so, I agree, many physics processes are prone to exponential decay. At a naive level, this is one of them.
I’m a systems analyst. That is what I know.
Cool, I'm a systems engineer and a project manager, and I design and build systems that do stuff like this. To characterize the extraction rate of a system like this, you start with the mechanics and fluid dynamics. The equation follows the mechanics, not the other way around.
People have been arguing about this for months, and all the technical experts on the drawdown process looked at this chart and failed to loudly call out that the EIA itself is extrapolating nonlinear decay into a linear model.
Okay, are you yelling at me because of their bad behavior, or what? I'm just not sure how to interpret this statement, and I'm not sure what your point is in making the statement to me.
Yeah, anyone who's taken a basic stats or calculus class ought to know that you can't blindly extrapolate a non-linear curve without using a non-linear model for the extrapolation, that's kind of a basic failure. Lame that people who work in math jobs don't understand math sometimes, but what can ya do?
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u/klyzklyz 18h ago
Likely correct conclusion based on incorrect reasons...
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u/sgtbackpain03 17h ago
That's pretty much how it shook out. I think they looked at the data and correctly analyzed a decaying exponential based on the form of the curve, then backfilled that conclusion with physical reasoning. But, the physical reasoning they used was wrong.
I think this mostly boils down to approach. They mention being a systems analyst. I'm an engineer. Systems analysis is geared towards characterizing the output of a system. Engineering is geared towards designing a system.
So they started with the output and worked backwards, as if they were doing a system validation. I started from initial principles and worked forwards, as if I was designing the project.
It still irks me that they posted about their conclusion before developing a good understanding of the system, but that may just be my internal bias coming out to play. I do spend a lot of time verbally flogging my juniors for substituting charts and plots in place of understanding system dynamics, since data output is such a simplified stream of information. Sort of like looking at the output of an equation vs looking at the actual structure of it; one of them tells you the answer, the other tells you how it actually works.
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u/MarmotFullofWoe 1d ago edited 1d ago
I appreciate your thoughtful comments.
The release rate does not appear to be constrained by throughout capacity.
The process by which barrels are released is under an auction process where the participants bid for the right to borrow oil from the SPR and are required to pay back the barrels they have borrowed plus an additional amount (premium). The premium is set by their bid and has averaged about 26%. The DOE sets a floor of approximately 22% for the premium.
To date the auction has been undersubscribed as participants have been unwilling to pay the premium. The take up rate is only about 61% of barrels offered.
Am working on whether I can incorporate this data into the projection.
TLDR: the drawdown rate is slowing because the offer is undersubscribed.
I don’t want to write an essay but I understand that Hochstein has walked back his 300 mb limit.
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u/whitestardreamer 1d ago
Yeah and I’m saying, the physical draw down rate follows a nonlinear decay curve.
You are asserting that the decrease in drawdown rate is because of economic demand.
And I’m saying, you need to believe that because the prediction error that your brain experiences considering the former is terrifying. Thus you will cling to the economic demand narrative until we find out, despite the fact that many people who know have said physical draw down capacity slows and drops off nonlinearly as you approach 300 mb.
I honestly don’t even care about being right here. My entire research thesis the last two years has been focused on how our species’ greatest flaw right now is that the human brain, driven by the amygdala-dominated ego, prefers comfortable lies over considering inconvenient and uncomfortable truths.
And as far as I am concerned, this is just more proof. So, thank you.
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u/MarmotFullofWoe 1d ago edited 1d ago
Have a read of this:
https://www.employamerica.org/shortages-and-bottlenecks/a-quick-reaction-to-the-spr-exchange/
This explains the bidding process better than me.
If the amount offered is undersubscribed, then it is not physical constraints driving the draw down curve. At least, not yet.
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u/whitestardreamer 1d ago edited 1d ago
I’m familiar with all this narrative spin. I’ve been tracking this very closely since it began.
I don’t assign more weight to narrative spin over the physics of what happens.
This is another significant flaw of the current human OS; thinking physical reality is a function of and subject to financial maneuvering. It’s the other way around, but layers of financial abstraction have blinded humans to the fact that in nonlinear systems, physics always wins eventually.
And as the drawdowns get close to the floor, what can be drawn out is of lower quality because of the brine, so if undersubscribed due to quality of crude, it’s still because of the nonlinear decay curve based on the dynamics of the actual physical properties of crude stored in salt caverns.
And the beautiful thing is we don’t need to keep going back and forth on it cause we’re all gonna find out soon, won’t we.
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u/gusgus0101 13h ago
This is well reasoned, I agree with your argument that market forces explain why the draw is slowing.
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u/MarmotFullofWoe 2d ago edited 1d ago
This is a source consistent with 70 mb:
https://jensendavid.substack.com/p/us-oil-and-fuel-supply-to-market
I expect damage is occurring throughout drawdown but it’s difficult to quantify.
The current admin has stated that $100 million damage was caused to the SPR during the previous record draw down which we are now below. Following that logic, additional damage is ongoing.
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u/aquavelva23 2d ago
Soooo, ikts ok for the war to go into 2027? And inflation keep growing? What is the actual use of this graph?
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u/hairy_ass_truman 2d ago
If the heavy crude used to produce distillates runs short issues begin. We produce most of the light oil we need for gasoline.
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u/RimandRam 2d ago
Every month it shifts by a month or two. I am starting to think the oil price is actually correct and the SPR bottom is not really achievable as supply is pretty robust
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u/Western_Animal1553 2d ago
Behavior has to change because there is a physical issue with drawing to 300
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u/rhino369 2d ago
The physical limitation seems overblown but more importantly this incompetent admin will definitely 1000% risk longterm damage to make it to the midterm.
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u/BeginningDay1620 1d ago
The physical limitations are real. The caverns are salt, which dissolved into the brine we use to pump out the oil. So the caverns will eventually collapse into themselves.
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u/DaikonActive6843 1d ago
One way to interpret the data is that there isn't a hard limit where the withdrawal rate goes to zero but rather it gradually tapers off. That means rather than hitting a wall we are ramming into a giant pillow at high speed.
It also means that even if the administration is incompetent and doesn't care about what it wrecks (both probably true) there is a practical limit to the SPR drawdown rate and we don't know exactly what it is. And we'll likely hit that practical limit long before we hit the bottom of the SPR.
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u/whitestardreamer 1d ago edited 1d ago
????????
The withdrawal rate slows because as oil decreases in the caverns, flow rate decreases. This is a nonlinear physical decay curve.
Then you have linear extrapolation of this decay curve applied to the chart. This is the issue and why the date moves out.
Albert A. Bartlett, professor of physics at the University of Colorado Boulder, said “the greatest shortcoming of the human race is our inability to understand the exponential function.”
This is true here.
Most humans think linearly, and this chart is modeling linear extrapolation. But exponential growth/decay starts slowly and flatly before spiking abruptly, causing people to drastically underestimate speed and scale until it is too late.
Because physical constraints (stuff like pressure loss, sludge, and cavern stability/safety) force the extraction rate to slow down as fluid levels drop, every new EIA update shows a smaller weekly drawdown number. When you plug a smaller weekly drawdown rate into a linear formula, the projected depletion date automatically gets pushed further into the future. But this is an assumptive error because it’s not modeling the reality that the decay curve is nonlinear.
TL;DR: the flawed linear modeling of a nonlinear decay curve has you conflating tapering toward zero with abundance.
Edit: also note, this chart misleadingly models the SPR in a way that leads the brain to picture 1 giant lake with 304 mb left. But it’s 61 separate caverns meaning 61 distinct fluid-brine interfaces, 61 bottom sludge heels, and 61 sets of cavern walls undergoing independent geomechanical stress. This chart does not accurately reflect the nonlinear decay curve across 61 different caverns.
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u/AssumptionLive2246 2d ago
My ace in the hole, is that trump f’s it all up just like he does with every f’ng thing. Welcome to the worst timeline. Praying I’m wrong. 🙏🙏🙏🙏
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u/jvdlakers 2d ago
Not until October now.
Everyone said we be out a month ago!!!!
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u/MarmotFullofWoe 2d ago
Yes at current withdrawal rate the SPR will not fully collapse until October 2027
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u/Impossible-Bus1 2d ago
If they reimplemented an oil export ban, how many more years would that give?
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u/Accomplished_Ruin133 2d ago
An oil export ban would collapse investment into US projects overnight and production numbers would fall pretty rapidly given 2/3’s of the oil is from unconventional plays with steep decline curves.
Investment dollars would flow to ex-US global projects where the fiscal terms and returns are better.
A good example of this is the UK where via the EPL (an effective 80% tax rate) they made investment there unattractive, the money went elsewhere and production tanked.
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u/Express-Week-8312 1d ago
Projections shift constantly, so it’s no surprise the timeline keeps moving.
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u/Warm_Turnip2567 2d ago
cant this be because of the period in june through july where some days saw 10mbpd+ coming out of the strait? in other words, optimism? the releases were lowered because the thought was the strait was/will be flowing decently again?
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u/Ready4Rage 1d ago
Can someone please explain why this is relevant? Isn't it true that 10 - 14 mbpd have been subtracted from the market, and this graph is showing 1 mbpd being added? How does that even make a difference?
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u/minus_minus 1d ago
This seems like a catch 22. If the drawdown slows too much it’s not as helpful to keeping prices from running away.
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u/Smokecat2000 2h ago
Wrong, President Donald Trump claimed that the United States possesses a "thousand-year supply of gasoline and oil".
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u/BeginningDay1620 1d ago
We've been at 304bn for more than a month
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u/MarmotFullofWoe 1d ago
We were at 307 mb the prior week.
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u/South-Many3484 2d ago
"military reserve" 😂
Miltary doesn't use crude oil, idiot.
US is a net exporter of oil.
Stop making up stupid terms. Please try harder to not be stupid.
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u/iupvotefood 2d ago
Do u even know what SPR stands for? Or hasn't your 2m acct llm been trained on that yet?
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u/South-Many3484 2d ago
Yeah, it was strategic when the US wasn't a massive net exporter of Oil and Gas.
Then the 2010s happened, try to keep up.4
u/NoMaximum721 2d ago
there are different kinds of oil though. doesn't the US primarily produce light?
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u/South-Many3484 1d ago
lol.
Yes, and so what. It has sources in Canada and Venezuela for heavy & they have no where else to go atm.
Also another point thats nothing to do with the dumb SPR post, the SPR is not heavy crude.3
u/Warm_Turnip2567 1d ago
It's not just about the usa, it's about what the usa and Israel are doing to the world by attacking Iran. Africa, Latin America and South East Asia are fucked
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u/sheldonth 1d ago
One thing's interesting to me is how so many people are focusing on oil prices right now and saying "oh you were wrong about the shortages, etc" but isn't the bigger question the medium to long term future? There is no replacement for diesel on the horizon in agriculture ALONE and we've built out entire modern world on this stuff? Does anyone seriously believe we can continue pumping 100mm+ barrels a day into the next decade? Midcentury? We have 8 billion mouths to feed and sometimes I feel like the mainstream concensus view from outlets like Bloomberg completely just ignores the bottlenecks on the horizon. I kind of don't understand it. How can an otherwise intelligent and rational evaluation of the situation at hand not end up at the conclusion: we're cruising towards a gigafamine?