Citigroup Projects Global Oil Demand to Hit Record in August
June 18, 2021
Energy price sold off yesterday as the US dollar strengthened after the Federal Reserve indicated it might raise interest rates as soon as 2023. Financial investors who bought commodities as a hedge against inflation took some profits. The US dollar has rallied roughly 1.6% in the last couple days on the Fed’s recent comments and that has pressured most commodity prices.
A tropical storm in the Gulf of Mexico is causing some supply concerns and could limit the downside for crude oil into the weekend.
Great Britain reported a rise of 11,007 new cases of COVID-19 yesterday which was up from 9,055 new cases the day before. The surge in cases in the UK is something that could impact other areas and will be watched by traders.
Citigroup analysts said that global oil product demand may hit a record in August, mostly driven by gasoline demand. The pent up demand could offset a jet fuel gap, as a 10% increase in US gasoline consumption increases demand by nearly 1 million bpd.
US merchant refiners have amassed a $1.6 billion shortfall in RIN credits that they need to comply with biofuels laws. Many have back off buying RINs due to price rallied to new highs with the hopes that the Biden Administration may offer some relief.
Democratic US congressional members sent a letter to the Environmental Protection Agency, urging the administration to reject any action that would exempt oil refiners from mandates to blend biofuels into the country’s fuel mix.
JBC Energy said US refiners are increasing gasoline shipments to Latin America despite high domestic demand, partly due to expensive RIN cost making export-oriented production more economical.
Saudi Arabia’s crude exports for April were 5.408 million bpd, which was a ten month low.