April 29, 2017: from Rigzone, gasoline demand concerns pressure oil prices. I beat the drum regularly on this one; seldom do I see stories about the decline in gasoline demand. Finally Rigzone has a story. Data points:
- for the second week in a row, EIA reported a substantial build in US gasoline inventories
- inventories rose by 3.4 million bbls
- demand for gasoline fell slightly
- 4-week average was down about 2% versus same period last year
- in anticipation of US driving season, refiners have been ramping up
- refining: 17.3 million bbls per day; seasonally high utilization rate of 94.1%
- at the same time, imports of gasoline have been unusually high over the last two weeks: almost one million bbls/day
Likewise, I have often said that the best indicator of jobs / job growth is gasoline demand. I have explained the reasoning elsewhere but I doubt I could find it now. If I do, I will post the link.
Today, the number of first time unemployment claims surged unexpectedly; the number of claims jumped 14,000 without any explanation (as far as I know; mainstream media will probably say it had something to do with the weather). Whatever.
So, the number of first time unemployment claims surged unexpectedly. Let's see what gasoline demand did. Wow! Gasoline demand has been absolutely flat for the past four reporting periods and below last year's demand (prior to the most recent report today) going into the busy US driving season. Until I saw the jobs report today, I had expected the gasoline demand to rise, perhaps even going up enough to overtake the gasoline demand one year ago.
But wow! Completely unexpected (until the jobs report came out): gasoline demand decreased and remains below the demand one year ago. Gasoline prices continue to remain very, very low. Crude oil was trading in a narrow range around the $50-line but in the past 24 hours dropped 2% to $48 and change. Right now it's down 2.5% for the day, and trading at $48.38.