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Will High Gasoline Prices Weigh On Oil Demand?

oil

Friday April 27, 2018

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Gasoline prices at highest in years

(Click to enlarge)

- Global demand is expected to rise by 1.6 mb/d this year, which could mark the fourth consecutive year of demand growth exceeding 1.5 mb/d, the longest stretch since the 1970s.
- But OPEC cuts combined with strong demand has pushed oil prices up to multi-year highs. The EIA says that gasoline prices in the U.S. will average $2.74 per gallon this summer, the highest in four years.
- If prices keep rising, demand will slowdown. There is debate about when this occurs and by how much, but above $3 per gallon, U.S. consumption starts to take a hit.
- OPEC seems somewhat in denial. "I haven't seen any impact on demand with current prices," Khalid Al-Falih told reporters at the meeting of OPEC and non-OPEC producers in Jeddah.

2. Offshore drilling picking up

- The head count at oilfield services companies exposed to the subsea industry has declined by 32 percent since 2013.
- The losses continued last year. In 2017, subsea-exposed companies cut 10 percent of its workforce relative to the year before.
- However, offshore drilling is starting to revive…

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