Energy demand has been soft according to the latest Energy Information Administration’s Petroleum Status Report. Crude inventories went up 3.6 million barrels after the first week of February.
Gasoline and distillate inventories increased as well. This is also following OPEC production cuts led by Saudi Arabia bringing the OPEC daily production average down by 797,000 barrels per day. OPEC’s new daily average is at 30.81 million barrels. However, the concept that a production cut will keep oil prices aloft may unravel quickly. Most market forecasters have had their eyes on China as their environmental initiatives gain traction and momentum. But with an estimated drop in demand of 181,000 barrels per day, Germany’s decline in oil demand may keep oil markets soft in the medium term. The continued strength of the dollar is also going to impact oil prices.
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