US Energy Information Administration Weekly Inventories Report
In its weekly report, the U.S. Energy Information Administration (EIA) reported that U.S. crude oil, gasoline and distillate inventories fell last week as crude production dropped sharply and refiners ramped up production.
The most supportive news in the EIA report was the drop in U.S. crude output to 10.7 million barrels per day from 11 million bpd in the previous week.
OPEC Trims 2020 Oil Demand, Raises Questions about 2021 Due to Virus Fallout
World oil demand will fall more steeply in 2020 than previously forecast due to the coronavirus and there are doubts about next year’s recovery, OPEC forecast on Wednesday, potentially making it harder for the group and its allies to support the market, Reuters reported.
World oil demand will tumble by 9.06 million barrels per day (bpd) this year, OPEC said in a monthly report, more than the 8.95 bpd decline expected a month ago.
IEA Sees Lower Oil Demand in 2020, 2021
The International Energy Agency (IEA) lowered its global oil forecasts for the first time in several months on Thursday, as the number of COVID-19 infections remains high and amid ongoing weakness in the aviation sector.
The IEA said it now sees global oil demand for 2020 at 91.1 million bpd, reflecting a fall of 8.1 million bpd day year-on-year. The revised forecast is 140,000 bpd lower than the IEA’s previous projection.
Although the U.S. cut production, OPEC+ is gradually raising output, which is helping to increase global supply so the EIA production-drop news isn’t as bullish as first thought. Furthermore, the ongoing uncertainty around demand caused by the COVID-19 pandemic and the possibility of higher global output could keep a lid on prices.
The inability of Congress to reach an agreement on additional stimulus measures could weigh on prices this week because the news has the potential to negatively affect demand. U.S. policymakers are not expected to revisit the issue until after September 7 when they return from their summer recess. An emergency meeting could be called but as of the weekend, it wasn’t being discussed.
Economic data last week was supportive for crude oil, but the numbers from July reflected an economy that was being supported by government aid. The longer the economy goes without additional stimulus, the worse the numbers could be for August. This concern could weigh on demand and prices this week.
Keep in mind that the U.S. summer driving season is quickly coming to an end. This puts further emphasis on U.S. gasoline supplies.