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.
Discount Heating Oil Prices is a company where one can find the lowest home heating oil prices. The company also provides delivery assistance to your home punctually and securely. Just visit the official website, enter your zip code, browse the lowest price available on heating oil in your place and click on the “buy now” button. Getting discount heating oil in Massachusetts is now just a click away from you