Weekly Inventory Report of the U.S. Energy Information Service
In its weekly report, the U.S. Energy Information Administration (EIA) reported that inventories of U.S. crude oil, gasoline, and distillate fell last week as crude production fell sharply and refiners increased production.
The most supportive news in the EIA report was the decline in U.S. crude output to 10.7 million barrels per day from 11 million bd per day in the previous week.
OPEC Trims 2020 Oil Demand, raises questions about 2021 due to Virus Fallout
Demand for world oil will fall steeper than previously expected in 2020 due to the coronavirus and there are doubts about the recovery next year, OPEC forecast on Wednesday, potentially making it harder for the group and its allies to support the market, reported Reuters.
Demand for world oil will tumble by 9.06 million tonnes per day (bpd) this year, OPEC said in a monthly report, more than the 8.95 bpd decline expected a month ago.
IEA seeks lower oil demand in 2020, 2021
The International Energy Agency (IEA) lowered its global oil forecast for the first time in several months on Thursday, as the number of COVID-19 infections remained high and amid continuing weakness in the aviation sector.
The IEA said it now sees global demand for oil for 2020 at 91.1 million bpd, reflecting a year-on-year fall of 8.1 million bpd. The revised forecast is 140,000 bpd lower than the IEA’s previous projection.
Weekly expectation
Although the US is cutting production, OPEC + is slowly increasing output, which is helping to increase global supply, so the EIA production drop news is not as bullish as first thought. Furthermore, the continuing uncertainty about 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 incentives could weigh on prices this week, as the news has the potential to negatively impact demand. U.S. policymakers are not expected to reconsider the issue until after Sept. 7 when they return from their summer recess. An emergency meeting could be called, but since the weekend it has not been discussed.
Economic data were supportive of crude oil last week, but July figures reflect an economy backed by government aid. The longer the economy goes without additional stimulus, the less the numbers may be for August. These concerns could weigh on demand and prices this week.
Keep in mind that the American summer riding season is coming to an end soon. This places further emphasis on US gasoline supplies.
