If you "invest" in energy names you have to ask yourself wtf happened in last 2 days
Stuff started to go downhill fast after the EIA release storage numbers. Some see a demand drop off. Here's is an article that talks about it
Today's Top Stories From the Breitbart News Desk
Is it possible that Americans are driving less than they did in the summer of 2020, when many Americans were working from home and operating under pandemic travel restrictions?
The Energy Information Administration said that the four-week average of U.S. gas deliveries had fallen 7.6 percent, down more than one million barrels a day below what was typical pre-pandemic. This is below the levels seen in the summer of 2020. The report helped push the price of gasoline futures down 11 percent on Wednesday. West Texas Intermediate crude oil fell down below $90 a barrel on fears of falling demand. Brent Crude fell three percent on Thursday to $93.90.
4 Week Avg U.S. Product Supplied of Finished Motor Gasoline
The story that's been circulating to explain the decline is one of demand destruction, the notion that Americans became so fed-up or tapped-out by high gas prices that they've begun to cut back on driving. Supporting this idea are polls showing that many Americans are driving less because of high gas prices. A poll released on July 6 by Rasmussen, for example, found 66 percent of Americans had reduced driving. A poll published on July 25 by the American Automobile Association found 64 percent of Americans had changed their behavior because of high gas prices, 88 percent of whom said they were driving less.
There's plenty of reasons to be skeptical, however, that demand has fallen that far. In the first place, the EIA implied demand figure is based on deliveries to gas stations rather than gas pumped into cars. There's some anecdotal evidence that gas station operators may be keeping their own orders low as prices fall, trying to avoid buying gas at a price higher than the market will bear in a few days. With gas prices falling for 49 consecutive days, this becomes an attractive strategy. It's not really a sustainable strategy, though, so at some point the EIA numbers would have to show a demand surge.
Jan Stuart, global energy strategist at Piper Sandler & Co., described the EIA numbers as "very crooked" in an interview with Bloomberg TV. In his view, the way the EIA numbers are compiled "leaves significant room for error."
"We're supposed to believe that in July, in the middle of the driving season, we're only using 8.6 million barrels a day. That would be down a half a million barrels a day from May. That would below the Covid low of 2020," Stuart said. "So we asked all the refiners. We asked all the retailers. We asked everybody that reported earnings this season. Every single one of them tells you that their sales are not down materially from even pre-Covid days. Some report record high sales."
Similarly, Bank of America's Doug Leggate reports that the refiners he follows are "not seeing it." They saw softer than expected demand around the July 4th holiday, when gas was close to $5 a gallon, but strong demand later in the month as prices kept falling. Indeed, it seems odd that demand would be so much lower as gas prices approached $4 than they were at $5. Leggate thinks an "adjustment factor" used by the EIA could be responsible for the apparent crash in demand.
Patrick De Haan of Gas Buddy says that his data, based on pump sales, showed an increase in sales.
There have been plenty of raised eyebrows about the timing of the EIA data, which came just after OPEC+ slapped President Joe Biden in the face with a minuscule 100,000 barrel increase in global oil quotas. Could the agency be cooking the books?
I call bullshit!
There is nothing to fear but fear itself speech
There is nothing to fear but fear itself speech
Last edited by Fraser921 on Thu Aug 04, 2022 10:06 pm, edited 1 time in total.
Re: There is nothing to fear but fear itself speech
As I have been posting here for months:
1. OPEC+ has not produced up to their quotas for seven months & I see no chance that they will. June was ~2 million bpd below the quotas.
2. The OPEC cartel has no significant amount of spare capacity left. SA and UAE may (and I stress the word "may") have a small amount of near-term ability to raise exports, but it is offset by other cartel members that have no chance of producing up to their official quotas.
3. The 100,000 bpd official increase announced by OPEC this week is like pissing on a forest fire.
1. OPEC+ has not produced up to their quotas for seven months & I see no chance that they will. June was ~2 million bpd below the quotas.
2. The OPEC cartel has no significant amount of spare capacity left. SA and UAE may (and I stress the word "may") have a small amount of near-term ability to raise exports, but it is offset by other cartel members that have no chance of producing up to their official quotas.
3. The 100,000 bpd official increase announced by OPEC this week is like pissing on a forest fire.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: There is nothing to fear but fear itself speech
One of the best explanations for the massive drop in gasoline demand wasn’t because consumers started to slow down purchases but because of actions by wholesale gas buyers. Sharply falling wholesale prices caused commercial buyers of gasoline to hold off on purchases and instead bought the minimum amount that they could buy in the hopes that they could buy gasoline cheaper in the new week