OPEC’s Monthly Oil Market Report (MOMR) for April featured an article on the summer petroleum products market. It observed that the U.S. is typically the key driver for products markets in the run-up to the summer driving season, and indicators are pointing to a positive and optimistic outlook.
It cites year-over-year January combined gasoline and diesel growth of 845,000 b/d. It states that the weekly data in February and March further supported this positive trend. And it concludes U.S. gasoline and distillates demand will grow by around a combined 992,000 b/d in 2018.
But a closer examination of gasoline demand and consumption estimates provide a different picture. Also, the MOMR totally ignored the supply side of the market, and last summer’s Hurricane Harvey and Mexico’s refinery problems contributed to support that is unlikely to be repeated this summer. Continue reading "2018 U.S. Gasoline Season Outlook"→
Peak demand for crude at refineries and for products to consumers is drawing to a close this season. Together, they caused total U.S. oil inventories to drop by 49 million barrels from their peak in the week ending June 9th. Total U.S. oil inventories stand at 1.304 billion barrels in the week ending August 11th, 58 million barrels lower than a year ago.
Refinery demand for crude oil set a new record high this summer, as the 4-week trend reached 17.458 million barrels per day, 4.4% higher than last year. As depicted in the graph below, refiners will soon be dialing back their operations for maintenance, and this will reduce the demand for crude at U.S. refineries by about 1.5 mmbd.
Domestic demand was relatively strong this summer, up about 2.0% from last year. Gasoline demand was somewhat disappointing, but distillate demand spiked. As shown in the graph below, seasonal demand has likely peaked and will be headed lower in the weeks and months ahead. Continue reading "Peak Oil Demand Season is Coming To A Close"→
A recent article noted that Saudi Arabia Is Buying Up America's Oil Assets. Saudi Aramco is buying U.S. refining and petrochemical assets as well as energy and technology companies through its Saudi Aramco Energy Ventures LLC fund.
Congress has recently received a Long-Term Strategic Review (LTSR) of the Strategic Petroleum Reserve. The SPR's mission is to protect the U.S. from severe petroleum interruptions. The LTSR was intended to identify the key challenges that could impact the ability of the SPR to accomplish its mission.
I submit that it ignores a key challenge, the foreign ownership of refineries and petrochemical plants, that could render the SPR crude supplies meaningless.
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