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Petroleum industry

Oil Demand Slumps Amid Weak U.S. Market

Strategic Insights

— 2 min read

As the new year began, the Energy Information Administration (EIA) reported that U.S. oil inventories rose last week, while demand for oil and gasoline faltered. The data showed that crude oil stocks rose 2.2 million barrels, gasoline stocks rose 2.479 million barrels, and distillate stocks (diesel/heating oil) rose 3.224 million barrels. The increase in inventory levels comes as demand for oil and gasoline continues to decline. U.S. gasoline use fell 4.1% in the week to a two-month low of 8.556 million barrels a day, and total oil demand fell 2.6% to a five-week low near 18 million barrels a day.

The surge in inventory levels has led to a decline in oil prices, with crude oil futures prices slumping below $102 a barrel. Analysts, such as Carl Larry of Oil Outlooks and Opinions, have described the numbers as "bearish," stating that there is "no doubt about it." The Iran nuclear crisis has also contributed to the increase in oil prices, with Iran threatening to block oil flows from the key Strait of Hormuz.

Key Takeaways:

  • U.S. crude oil stocks rose 2.2 million barrels in the week ended Dec. 30.
  • Gasoline stocks rose 2.479 million barrels, more than twice the size of the expected rise.
  • Distillate stocks (diesel/heating oil) rose 3.224 million barrels, more than five times the projected rise.
  • U.S. gasoline use fell 4.1% in the week to a two-month low of 8.556 million barrels a day.
  • Total oil demand fell 2.6% to a five-week low near 18 million barrels a day.
  • Demand for distillate fuel (diesel and heating oil) was 7.3% lower in the week and 5.5% below a year ago.
  • The EIA said crude and gasoline stocks ended the year in the upper end of their five-year average level.
  • Distillate stocks were in the middle of the five-year range.
  • U.S. crude oil prices fell to a low of $101.95 a barrel after the EIA data.

Statistics:

  • Oil prices fell below $102 a barrel.
  • 2.2 million barrels: The amount by which crude oil stocks rose.
  • 2.479 million barrels: The amount by which gasoline stocks rose.
  • 3.224 million barrels: The amount by which distillate stocks (diesel/heating oil) rose.
  • 4.1%: The percentage by which U.S. gasoline use fell in the week.
  • 2.6%: The percentage by which total oil demand fell.
  • 18 million barrels a day: The amount by which total oil demand fell to.
  • 7.3%: The percentage by which demand for distillate fuel (diesel and heating oil) fell in the week.
  • 5.5%: The percentage by which demand for distillate fuel (diesel and heating oil) fell below a year ago.
  • $101.95: The lowest price at which crude oil futures traded after the EIA data.

Sources:

  • Dow Jones Commodities News via Comtex (Jan 05, 2012)
  • Dow Jones Newswires
  • Energy Information Administration (EIA)
  • Carl Larry, analyst at Oil Outlooks and Opinions
  • David Bird, reporter at Dow Jones Newswires
  • Dow Jones & Company, Inc. (Copyright 2012)

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