U.S. Oil Consumption Remains Weak

The U.S. Energy Department’s weekly inventory release showed a surprise climb in crude stockpiles, while distillate supplies posted a smaller-than-expected draw. The agency

…With crude reserves rising unexpectedly, we take this as an indication that energy consumption in the world’s biggest economy remains slack. As a result, following the EIA release, oil prices tumbled the most in six months. However, an unexpected drawdown in fuel stocks (especially gasoline) helped limit the price weakness, although the decline in supplies followed a drop in production, rather than a much-awaited pick-up in oil demand.

In particular, refining activity remains weak with utilization rates hitting their lowest point since the 1980s. With U.S. oil product demand showing little signs of a recovery, refiners had no appetite for additional barrels.

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