Oil bulls headed over demand cliff
Over the past five years, refiners’ thirst for oil has dropped an average of 1.2m barrels a day
Beware, oil bulls: Just as US oil production sinks low enough to drain supplies, demand is about to fall off a cliff.
American gasoline consumption typically ebbs in August and September as vacationers return home, and refiners use that dip to shut for seasonal maintenance. Over the past five years, refiners’ thirst for oil has dropped an average of 1.2 million barrels a day from July to October.
“People are looking ahead to the fall and are worried,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.” There’s more and more talk of prices going south of $40 (Dh164) and as a result people are going short.”
Ample stockpiles
Money managers added the most bets in a year on falling West Texas Intermediate crude prices during the week ended July 19, according to Commodity Futures Trading Commission data. That pulled their net-long position to the lowest since March. WTI dropped 4.6 per cent to $44.65 a barrel in the report week and traded at $44.14 at 11.53am Singapore time on Monday.
With weekly Energy Information Administration data showing US gasoline stockpiles at the highest seasonal level since at least 1990, refiners may shut sooner and for longer ahead of the Labor Day holiday in early September, the end of the driving season.
“With gasoline supplies the highest since April, refiners may pull some projects forward,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “This will take more support away the market and add to the broader problem of excess supply.” UAE 22 ct Gold/10g