While the US EIA data reveals the ninth straight week of declines in US crude inventories, refined products stocks continue to grow. Some would suggest that the slowly dwindling US crude stockpiles means that the global oil market is tightening. However, the more likely scenario is that re ners have been gobbling up crude oil and churning out gasoline in order to meet the historic demand seen over the summer months. The season of high demand for gasoline is coming to a close in September and oil prices seem to be re ecting the probable decline in demand. Because gasoline inventories have grown so much, refiners will slow down and purchase less crude, leaving more crude in the market.A possible win within the global oil industry is that Saudi Arabia seems reluctant to ramp up production, even though the kingdom is tapping into inventories in order to meet export and domestic demand. Many nations have reduced production, and therefore exports, leaving room for Saudi Arabia and other OPEC members to attain more market share. According to the Wall Street Journal, Saudi crude inventories fell 123% to 289 million barrels from October 2015 to May 2016. Much like the US, Saudi Arabia’s domestic consumption spikes during the summer months, although Saudi crude consumption is used predominantly for electricity. It appears that the Saudis are hesitant to increase production, because they do not want to upset the markets or send a false signal that implies they are ooding the market.
Source: RigData – RigData Insights