• 2 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 2 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 2 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 3 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 3 days British Utility Companies Brace For Major Reforms
  • 3 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 4 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 4 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 4 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 6 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO

Why Oil Prices Are On A Crash Course This Fall

Offshore Guyana

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:




Back to homepage


Leave a comment

Leave a comment




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