U.S. oil demand continues its upward trajectory (reaching a record high last week), while product inventories have fallen to their lowest levels in three years.
According to some analysts, if the demand trend continues, oil prices may rise further the rest of the year.
Although the impact of Hurricane Ida on the oil sector distorted data from this week’s U.S. Energy Information Administration inventory report, the product supplied (the power of demand of EIA) continued to pick up pace.
Crude oil inventories decreased by 1.5 million barrels for the week to Sept. 3, with major draws also on fuel inventories, the EIA said in its weekly report. Crude inventories, with 423.9 million barrels, are below the five-year average for this time of year.
Gasoline inventories fell 7.2 million barrels during the period, compared to a draw of 1.3 million bpd the previous week. In medium distillates, the EIA estimated an inventory draw of 3.1 million barrels for the week to September 3, a larger decline compared to 1.7 million barrels for the week previous.
Motorized gasoline finish supplied between the week and September 3rd rose to 9.608 billion barrels per day (bpd), compared to 9.578 billion bpd in the previous week.
This implicit demand for gasoline was “a healthy read for Labor Day weekend,” AAA dit Thursday.
In a four-week average, the implicit demand for gasoline in the United States stood at 9,523 million bpd, up 8.9 percent from the four-week average demand of 8,742 million bpd for those weeks in 2020 , showed EIA data.
The average demand for fuel for aircraft for four weeks increased by 65.3% compared to last year, to 1.622 billion bpd. Demand for distillates rose 11.2% to 4,126 million barrels per day.
“U.S. fuel demand figures in the weekly EIA data showed a continued healthy recovery. Gasoline demand of 9.52 million b / d in a four-week average represents approximately 98% of the corresponding levels. in 2019, while the demand for distillates at 4.13 million b / d is 105% “, Vanda Insights dit in a note early Friday, commenting on EIA numbers.
John Kilduff, a partner at Again Capital, commented Reuters on the latest implicit gasoline demand figures in the United States:
“This number of petrol demand is high and this has been the pattern throughout the season. We haven’t seen the seasonal decline we saw on July 4. ”
Strong demand could be combined with low inventories to support oil prices for the rest of the year, wrote an analyst at energy research service HFI Research Looking for Alpha.
According to EIA data, total liquids recorded a draw of 10.4 million barrels for the last reporting week, with a total liquid stock now falling below 2018 levels.
“In terms of demand, implicit oil demand in the United States on a four-week basis continues to rise despite this week’s hurricane data,” HFI Research said.
According to analysts, if demand remains strong, U.S. total liquid inventories, including the Strategic Oil Reserve (SPR), could fall below the 2010-2014 average.
“And as long as the fundamentals show continued uptake of inventories, oil prices will rise by the end of the year,” according to HFI Research.
But not all analysts are optimistic about US gasoline demand. Some say average U.S. prices nearly $ 1 higher at the pump and at the end of the driving season will make demand for motor gasoline lower in the coming weeks.
As of Sept. 9, the national average price of a gallon of regular gasoline was $ 3,181, compared to $ 2,213 / gallon at the same time last year, according to AAA data.
“GasBuddy’s gasoline demand data shows seasonal weakness, while EIA’s proxy server inexplicably shows continued strength that does not match reality. Definitely a skeptic given the sharp drop in demand following Ida, especially in the Northeast, “said Patrick De Haan, head of oil analysis at GasBuddy. he tweeted Thursday, commenting on EIA’s implicit demand data.
By Tsvetana Paraskova for Oilprice.com
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