• 4 minutes End of Sanction Waivers
  • 8 minutes Balancing Act---Sanctions, Venezuela, Trade War and Demand
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 14 minutes What Would Happen If the World Ran Out of Crude Oil?
  • 4 hours Alliances: Iran And Pakistan To Form Joint Rapid Reaction Force At Border
  • 30 mins Saudi Arabia Says To Coordinate With Other Producers To Ensure Adequate Oil Supply
  • 4 hours Climate Change Protests
  • 11 hours Gas Flaring
  • 2 hours Populist Surge Coming in Europe's May Election
  • 3 hours US Military Spends at least $81 Billion Protecting OPEC Persian Gulf Oil Shipping Lanes (16% DoD Budget)
  • 12 hours Mueller Report Brings Into Focus Trump's Attempts to Interfere in the Special Counsel Investigation
  • 9 hours "Undeniable" Shale Slowdown?
  • 12 hours Trudeau Faces a New Foe as Conservatives Retake Power in Alberta
  • 13 hours U.S. Refiners Planning Major Plant Overhauls In Second Quarter
  • 4 hours Don't Climb Onto the $80+ Oil Price Greed Roller Coaster, Please.
  • 12 hours China To Promote Using Wind Energy To Power Heating
Alt Text

Oil Could Fall To $40 If OPEC Abandons Its Deal

Russia has announced that the…

Alt Text

Oil Prices Snap Winning Streak

The oil price rally paused…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

Why Oil Prices Are On A Crash Course This Fall

Refining maintenance season is a few weeks away, a period of time that could be hugely negative for oil prices.

Already the oil markets are dealing with record levels of oil and petroleum products sitting in storage, but a refining lull would put a major dent in oil demand. While the maintenance season is temporary, it could keep oil prices low for the next several months.

Between the months of July and October, purchases of crude oil from the refining industry in the U.S. has declined by roughly 1.2 million barrels per day over the past five years. "People are looking ahead to the fall and are worried," Michael Lynch, president of Strategic Energy & Economic Research, told Bloomberg in an interview. "There’s more and more talk of prices going south of $40 and as a result people are going short."

Gasoline inventories remain at extraordinary high levels, only down slightly from record highs. Several weeks of increases in the level of gasoline sitting in storage has weighed on the markets. Worse, the high inventories come at a time when oil traders expected them to fall because of summer driving season. Unfortunately for oil bulls, they have not.

Crude oil inventories have declined for about ten consecutive weeks, but still are extremely high. And the drawdowns could come to an end, or at least narrow, if refiners cut back on purchases during maintenance season. Related: Is This A Game Changer For The US Oil Industry?

That is all bearish news for oil prices in the near-term, and the markets are starting to take notice. Hedge funds and money managers have cut their bets on rising oil prices and increased their short bets. Net-long positions are at their lowest level since March.

Piling on to negative news is the steady rise in the rig count. Baker Hughes reported yet another uptick in the rig count last week, increasing the likelihood that the oil and gas industry adds new sources of production, which could halt more than year-long contraction in supply.

WTI and Brent fell by more than 2 percent during midday trading on July 25, both dipping below $45 per barrel.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




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