Last week, the U.S. Energy Information Administration (EIA) weekly petroleum status report delivered more bad news to the crude oil market, but the EiA’s long-term outlook most likely set the tone for a bearish market into the end of the year.
The weekly report showed U.S. commercial crude inventories increased by 1.4 million barrels in the week-ended August 8. This came as a surprise to traders who had priced in a 0.8 million barrel decline. Total U.S. commercial crude inventory rose to 367 million barrels, putting it above the upper limit of the five-year range for this time of the year.
Total gasoline inventories which helped give crude oil a slight boost last week, declined by 1.2 million barrels the week-ended August 8. This didn’t help gasoline or crude oil prices this week because Total Motor Gasoline supplied which represents the EIA’s measure of consumption, averaged more than 9 million barrels a day in the past four weeks. This was a drop of about 1.3% compared with the same period a year ago.
The previous week’s gasoline consumption data was friendly because it indicated greater consumer demand, but this week’s data shows that a trend did not form, setting up the market for further downside pressure. Coupled with the shutdown of some refineries for maintenance, this should’ve created a bullish gasoline/bearish crude oil scenario which doesn’t seem to be forming.
Slackening demand for gasoline may…