• 1 hour Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 hours New Video Game Targets Oil Infrastructure
  • 4 hours Shell Restarts Bonny Light Exports
  • 6 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 12 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 17 hours British Utility Companies Brace For Major Reforms
  • 21 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 23 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 24 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 1 day OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 1 day London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 day Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
Alt Text

Footloose Iraq Cannibalizes Saudi Market Share

OPEC’s de-facto leader Saudi Arabia…

End of Driving Season Could Send Oil Back to February Lows

Chevron Assets

Summer driving season: it’s the season to be traveling, what with long weekends, annual leaves and short getaways from the banalities of everyday life at the office. The summer season in the Northern Hemisphere is when demand for crude oil invariably picks up, because fuel consumption increases. In Europe, there’s greater hunger for diesel and in the U.S. there’s a pickup in gasoline demand. Usually.

This year’s driving season, however, is shaping up to be a very disappointing exception to the usual seasonal patterns in fuel demand. People are not traveling now as much as analysts expected back in May. Back then, the outlook was rosy, with some analysts forecasting an oil rebound to as much as $60 a barrel. Instead, we got WTI slipping into bear market.

The driving season ends next month, which is when most refineries shut down for maintenance after operating at near-full capacity during the summer months. This is—historically—when gasoline demand subsides. The end of summer travels is also when gasoline stockpiles in the U.S. could increase, further pushing down crude oil prices.

In the week ending 22 July, the EIA reported, gasoline production averaged 10.1 million barrels a day, more than in the previous week. Inventories of the most popular fuel also went up—by 500,000 barrels—after a 900,000-barrel buildup in the week ending 15 July. That buildup took the market by complete surprise—few seemed to have expected anything but a decline in fuel stockpiles in the very middle of driving season. Yet, they got the opposite.

It’s become a widely, though grudgingly, accepted truth that it’s impossible to predict what will happen in the oil market even in the nearest terms, what with all the supply disruptions that can happen here and there, and with the unpredictability of consumer behavior. However, looking at the most likely scenario for oil prices in September when refineries start shuttering operations for their regular maintenance, it would be safe to say prices will go further down.

They will go further down even if there are new supply outages in Nigeria or Libya – the market has basically gotten used to these as evidenced by the lack of any huge effect on international prices off the latest news from either Nigeria (new pipeline attacks) or Libya (plans to reopen four export terminals). While it’s true the latter could pressure international prices significantly if the plans announced come to fruition, the immediate effect has not been that great.

In the absence of any unforeseen events, crude oil might fall to lows last seen in February, especially when we factor in the behavior of Saudi Arabia, which seems to have no intention of curbing output and losing market share, and Russia, which is still pumping at record highs, despite a gaping budget deficit created by falling oil revenues.

By Irina Slav For Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Joe on August 02 2016 said:
    Thanks for the article. We know a lot abot seasonal gasoline consumption in the USA. How much do we we know about seasonal gasioline use in a China and India? Might be interesting.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News