My judgment relies on publicly accessible provide and demand stories (EIA).
- These stories indicated that COVID lockdowns crashed demand by ~4 million barrels per day (mb/d). Starting in mid-April, gasoline demand has recovered to about 1 mb/d under pre-COVID.
- In response to the Russian-Saudi value battle, COVID demand decreases, and monetary points, oil manufacturing has decreased by ~2.5 mb/d. With the Rig Count cut by 75% over the past year, to 261, it’s unlikely oil provide will ever return to pre-COVID 13 mb/d.
- About 100 million barrels of oil and 20 million barrels (graphic under) of gasoline inventories piled up throughout the COVID shutdowns. It seems that present demand is being happy by burning this stock. Tendencies point out gasoline inventories will drop under the 5-year averages and under the 190 million barrels of stock the place gasoline shortages happen.
- It appears extremely doubtless that between Dec 2020 and June 2021, gasoline costs should rise excessive sufficient to chop demand by 1 mb/d. And, proceed to rise to suppress demand as current fields deplete at 27% per 12 months.
Disclosure: I’m/we’re lengthy UGA. I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it. I’ve no enterprise relationship with any firm whose inventory is talked about on this article.