Yesterday’s EIA data put the spotlight back on demand. All product implied demand may have gained 0.1mmbd (+0.6%) WoW, enough to sneak in above the prior five year low, but it is down 7.9% YoY. Indeed, on a YTD cumulative basis, all product demand has reached a new low, down 0.9% YoY, the sixth week in a trend of worsening cumulative demand.
Weak implied gasoline demand has been the key driver to weak overall demand and even though there was a WoW increase of 0.1mmbd (+1.1%), cumulative YTD implied gasoline demand is now down 1.6% YoY, the worst reading of the year. Gasoline demand remains firmly below the five-year range, where it has been since mid-October, despite the ongoing fall in price which eased fractionally WoW to USD 3.286/US gallon.
Despite a 2.6% decrease in refinery utilisation, where the market expected no change, and a slight WoW fall in gasoline imports, gasoline inventories gained 3.8mmb WoW, further emphasising the parlous state of gasoline demand. Yesterday’s focal point for the market was the OPEC meeting (see today’s OPEC Meeting Outcome – An Easy Option). That outcome of that meeting, in conjunction with another set of poor US demand data, only serves to reinforce our view that oil prices in 2012 will be under downward pressure relative to 2011. We retain our USD 100/bbl forecast for 2012.
The US EIA data recorded a 1.9mmb draw in crude inventory (vs. -2.5mmb expected), a 0.5mmb distillate build (vs. +1.0mmb expected) and a 3.8mmb gasoline build (vs. +1.2mmb expected).