A U.S. energy trade group said the petroleum market in the country was hit by slumping demand. Total petroleum deliveries for August were at their lowest level for the month in 15 years and domestic oil production followed similar trends. Unemployment figures and data from the manufacturing sector were listed as contributing factors. Overseas, meanwhile, the IMF said there were short-term prospects for recovery, though trouble was brewing over the horizon.
The American Petroleum Institute reported that U.S. petroleum deliveries were down to 18.6 million barrels per day. While this represents a 2.8 increase from the previous month, it reflects a 4.3 decline from the same period last year and marks a 15-year low for the month. Petroleum deliveries are an indication of market demand and the API's chief economist, John Felmy, said levels for August are indicative of a lacklustre economy.
"Given the nation’s weak employment situation, it’s no surprise petroleum demand was off," he said in a statement. "Contraction in the manufacturing sector probably also reflects the slipping numbers."
The U.S. rate of unemployment has stayed above 8 percent for 43 consecutive months, the longest period since World War II.
Gasoline demand for August was down 0.4 percent compared to the same time last year. Hurricane Isaac, which struck the southern U.S. coast as a Category 1 storm late August, shuttered gulf coast production, causing a spillover effect in retail markets. Some regions of the United States saw prices hover above $4 per gallon for several weeks after the storm. API, however, said demand for gasoline was down nearly a full percentage for the year.
Imports of crude oil, however, declined but so did the number of rigs operating in the United States, API said. No mention was made by the API of White House considerations for a drawdown from the Strategic Petroleum Reserve. The industry group, which represents more than 500 oil and natural gas companies, said crude oil stocks were up 2.7 percent compared to August 2011, but down nearly 2 percent from their July levels.
Overseas, OPEC, in its latest monthly report, said it expected the Eurozone to return to growth after suffering further contractions this year. Christine Lagarde, managing director of the International Monetary Fund, said expiring tax cuts and spending cuts in the United States presented a "serious" risk to the health of the global economy. For the Eurozone, the situation was notably worse.
"We continue to project a gradual recovery, but global growth will likely be a bit weaker than we had anticipated even in July, and our forecast has trended downward over the last 12 months," she said in a statement.
By. Daniel J. Graeber of Oilprice.com