As the world’s biggest consumer of oil, the US showed a surge in gasoline inventories, which indicated a weaker than expected fuel demand at the start of summer. Fuel consumption generally goes up in summer for AC consuming energy, requiring gas-powered generators to operate at a higher duty cycle. Summer is also the peak driving season for individuals and families to take their vacations. With the Covid-19 vaccine distribution on track, we can expect an increase in transportation fuel as well.
In other words, although the immediate oil consumption is weaker than expected and created a slip in the crude oil prices, there are still many reasons to believe that the oil demand and supply will remain at a reasonable level. All in all, despite a 5-million barrel draw in crude oil production, the demand slid with it, creating a balance. Once the demand starts ranking up, the production should be higher as well.
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