Could US Gasoline Demand Fall in the Coming Months?

by Frankie Norman August 24, 2017, 1:38
Could US Gasoline Demand Fall in the Coming Months?

Because of lag times and other metrics, rig counts in and of themselves don't indicate future production trends, though the downturn could be a sign of a slowdown in USA onshore activity as crude oil prices linger in a narrow trading band. Benchmark Brent crude LCOc1 was unchanged at $51,66 a barrel by 1120 GMT.

Libya's rising crude oil production is coming at a time when OPEC is struggling to reduce a glut in the market in order to spur prices to higher levels.

"The rig count suffered its biggest fall since January, adding to signs that the market is tightening", ANZ bank said. Overall U.S. crude stocks fell to 463.2 million barrels, a 14-percent drop from the peak of 535.5 million barrels at the end of March.

USA crude inventories fell 3.3 million barrels last week, compared with analyst expectations for a decrease of 3.5 million barrels.

Next month will mark the official end of driving season and we could see more inventory builds as it draws near and hence more pressure on oil prices. The efforts have been hindered by rising output from shale fields and countries like Libya, which is exempt from OPEC-led cuts.

Oil in NY has fluctuated below $50 a barrel as investors weigh rising global output against supply cuts by the Organization of Petroleum Exporting Countries and its allies that are taking longer than expected to drain a glut.

However, top exporter Saudi Arabia has said its exports would drop to 6.6 million bpd this month, nearly 1 million bpd below levels a year ago.

Concerns over higher Libyan production have weighed on the market this year.

The report from the American Petroleum Institute, which came out after oil settled on Tuesday, showed crude inventories declined by 3.6 million barrels during the week ended August 18, as expected, while gasoline stocks unexpectedly rose by 1.4 million barrels. WTI prices bounced higher to around $47.92 a barrel within 10 minutes. As for new sanctions on Iran, Kilduff said the other Western powers that took part in the deal are unlikely to join the new sanctions, which will curb any adverse effect on Iran's oil industry. The Street was expecting a 3.3 million drawdown in USA stockpiles this week.

USA crude production, which has been growing steadily, rose 26,000 bpd to 9.53 million bpd.

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