U.S. Oil Demand Overstated By 16pc

ALhambra: More Bad Economic News From The Oil Patch
When oil prices first crashed starting in late 2014 and really January 2015, commentary was filled with the words “supply glut.” Particularly related to US fracking as the biggest contribution to non-OPEC growth, the intent in using those words almost exclusively was to downplay the possible negative implications of a serious commodity crash (especially what was causing it) given that such crashes are monetary by nature. At most, there would be some words expressed about economic “concerns”, but for the most part oil prices were purported to be the victim of too much success.

A year and a half later, supply remains a problem but focus has finally shifted toward demand, though not by choice. And it is here that the IEA’s latest forecasts have hit oil views hard. First, OECD oil inventories continue to climb, hitting a new record of 3.11 billion barrels in July even though, “refinery activities reached a summer peak, crude oil inventories refused to decline.” Now, however, refineries are starting to reject additional crude supplies, forcing the IEA to reduce its 2016 forecast for coming refinery runs to the “lowest rate in a decade.”

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