Gold Silver Reports — Despite US refineries shutting for seasonal maintenance for two months, analysts fear oil may go south of $40barrel
Just as US oil production sinks low enough to drain supplies, demand is about to fall off a cliff.
Curde Oil Bulls Ready to Fall off the Demand 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.“There’s more and more talk of prices going south of $40 and as a result people are going short.“
Money managers added the most bets in a year on falling West Texas Intermediate crude prices during the week ended July 19. WTI dropped 4.6% to $44.65 a barrel in the report week and traded at $43.85 as of 10:26 am London 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. “With gasoline supplies highest since April, refiners may pull some projects forward,“ said Tim Evans, an energy analyst at Citi Futures Perspective. “This will take more support away from the market and add to the broader problem of excess supply.“
“If we’ve gone through the bulk of the summer driving season and haven’t done much damage to gasoline supply, refiners are going to react,“ said Michael D Cohen, an analyst at Barclays in New York.
……but There’s Still Some Hope
Crude oil prices hit a 10-week low, but one piece of data could provide a glimmer of hope. Saudi Arabia is burning through some of its oil inventories as exports combined with domestic demand exceeds its total production. As other producers have cut back production, there is more room for Saudi & Opec to export. At the same time, demand is rising quickly in Saudi Arabia — Neal Bhai Reports