MK: Gasoline Demand: Important for Crude Oil Bulls
The EIA (U.S. Energy Information Administration) reported that US gasoline demand rose by 114,000 bpd (barrels per day) to 9.8 MMbpd (million barrels per day) from July 8–15, 2016. Gasoline demand rose by 1.1% week-over-week and by 0.4% YoY (year-over-year).
US gasoline demand is expected to increase by 130,000 bpd to record levels of 9.3 MMbpd in 2016. This would be the highest annual average gasoline consumption on record. Gasoline demand rose 2.7% in 2015 to an average of 9.2 MMbpd.
US highway travel is expected to rise by 2.5% in 2016 compared to 2015 due to lower retail gasoline prices and the strong labor market in 2016. This will lead to a rise in gasoline consumption in 2016. Expectations of a rise in gasoline demand should support gasoline and crude oil prices.
Slowing US crude oil production
The EIA reported that weekly US crude oil production rose slightly by 9,000 bpd to 8.5 MMbpd from July 8, 2016, to July 15, 2016. Read Why US Crude Oil Production Rose for the Second Week to learn more about weekly US crude oil production. For more on monthly US crude oil production, read US Monthly Crude Oil Production: Lowest since September 2014.
The EIA forecasts that US crude oil production will fall by 820,000 bpd in 2016 compared to 2015. It says it will fall further by 410,000 bpd in 2017. The expectations of slowing crude oil production from Angola, China, Colombia, Indonesia, Iraq, Mexico, Nigeria, Venezuela, and the United States should support crude oil prices.
Impact of oil and gas prices
Higher crude oil and gasoline prices positively impact oil producers and refiners such as Triangle Petroleum (TPLM), Tesoro (TSO), and Bill Barrett (BBG).
Volatility in crude oil prices affects ETFs and ETNs such as the Direxion Daily Energy Bear 3x (ERY) and the ProShares UltraShort Bloomberg Crude Oil (SCO).
