Today’s EIA weekly petroleum report showed a recovery in US crude oil supplies but further drops in gasoline inventories. A large increase in crude imports triggered one of the largest weekly crude gains (9.4 million barrels) this decade. The gasoline scene has shifted stock levels from way above average to way below average in four quick weeks. Distillate inventories are slightly above average and propane below average. Gasoline demand reduction remains the theme of 2008 and may allow oil prices to fall back toward what may be developing as a floor around $110 per barrel.
On the supply side, Libya had a storage tank fire which is slowing its output almost 100,000 barrels per day and Caspian oil struggles to find its way to export markets post-invasion of Georgia. The potential of hurricanes in the Gulf of Mexico remains a wild card on the supply side, as does post-Olympics Chinese demand. And an OPEC meeting in early September will be crucial as they decide whether to keep production flat or to reduce it (a move they seem to be uninterested in taking unless oil prices go below $100 per barrel).
So, oil prices remain high enough to keep the world focused on efficiency and alternatives. It’s our job to ensure that the alternatives supported by our governments are the climate-friendly ones.
Onwards-