• 4 minutes Why Trump will win the wall fight
  • 7 minutes Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 12 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 16 minutes Washington Eyes Crackdown On OPEC
  • 46 mins Climate Change: A Summer of Storms and Smog Is Coming
  • 11 hours North Korea's Kim To Travel To Vietnam By Train, Summit At Government Guesthouse
  • 13 hours Oil imports by countries
  • 11 hours America’s Shale Boom Keeps Rolling Even as Wildcatters Save Cash
  • 13 hours AI Will Eliminate Call Center Jobs
  • 20 hours Ayn Rand Was Right
  • 17 hours NZ Oil, Gas Ban Could Cost $30 Bln
  • 19 hours Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
  • 1 hour US-backed coup in Venezuela not so smooth
  • 22 hours Sanctions or Support: Despite Sanctions, Iran's Oil Exports Rise In Early 2019
  • 16 mins Some Good News on Climate Change Maybe
  • 19 hours Solar and Wind Will Not "Save" the Climate
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