• 3 minutes Will Iron-Air batteries REALLY change things?
  • 7 minutes Natural gas mobility for heavy duty trucks
  • 11 minutes NordStream2
  • 13 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 hours U.S. Presidential Elections Status - Electoral Votes
  • 16 hours Evergrande is going Belly Up.
  • 9 hours Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 19 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 3 days Poland Expands LNG Powered Trucking and Fueling Stations
  • 3 days World’s Biggest Battery In California Overheats, Shuts Down
  • 2 days The unexpected loss of output from wind turbines compels UK to turn to an alternative; It's not what you think!
  • 1 day Ten Years of Plunging Solar Prices
  • 2 days Extraction of gasoline from crude oil.
  • 4 days The coming Cyber Attack
  • 4 days Is the Republican Party going to perpetuate lies about the 2020 election and attempt to whitewash what happened on January 6th?
  • 4 days Ozone layer destruction driving global warming
  • 4 days 'Get A Loan,' Commerce Chief Tells Unpaid Federal Workers
Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

IEA: Gasoline Glut Could Cause Oil Price Rout

Oil prices have been crushed over the past two years because of a glut of production. With supplies falling off, particularly in the U.S. shale patch, prices have begun to firm up. But another glut that has built up and has stubbornly refused to fall threatens another oil price downturn.

In its July Oil Market Report, the International Energy Agency warned about shockingly high levels of refined products sitting in storage. Gasoline, diesel and heating oil are built up to such high levels in so many parts of the world, that a sharp rise in crude oil prices is unlikely in the short run.

The IEA said that “the fact that crude oil has in the past two months moved within a range in the high $40s/bbl should be a relief for some producers.” But it went on to caution that “the existence of very high oil stocks is a threat to the recent stability of oil prices.”

The Paris-based energy agency cited one damning statistic: refinery runs in the first quarter of 2016 ran 60 percent higher than refined product demand growth. That has led to a buildup in inventories. The IEA said that “although stocks are close to topping out, they are at such elevated levels, especially for products for which demand growth is slackening, that they remain a major dampener on oil prices.” Related: U.S. Production Is Falling, Why Isn’t Oil Recovering Faster?

Of course, as storage levels reach their limits and refiners begin to cut back on production, the pressure on storage facilities should ease. The flip side of that development is fewer refiners purchasing crude oil, leading to a fall in oil demand.

On cue, the U.S. Energy Information Administration released new weekly figures that backed up the IEA’s conclusions. The EIA found that for the week ending on July 8, gasoline stocks actually rose by 1.2 million barrels, and remain substantially higher than even the upper limit of the long-run average for this time of year.

The result? Crude oil prices are down sharply during midday trading today, with WTI down nearly 4 percent and Brent off by more than that amount.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Jack B :-) on July 13 2016 said:
    Oil keeps pretty well. Heating oil keeps a bit less. Gasoline and diesel don't stay fresh for long. They have a pretty short shelf life. Not sure who's factoring this in...
  • JHM on July 13 2016 said:
    Yup, total US commercial petroleum stock had a 7.1 mmb build even as crude saw a draw of 2.5 mmb this week. So the refinery produced inventory is swelling pretty fast, especially over a holiday weekend. So while the headlines feature a 2.5 mmb draw, the system is getting flooded.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News