The EIA reported on Wednesday that U.S. demand for gasoline for the month ended August 1st topped out at 9.4 million barrels per day. That was 2.3% lower than the same period in 2007. Gasoline inventories fell by 4.4 million barrels over the past week as refiners produced less and retailers loaded up on the "cheap" gasoline ahead of the last four weeks of summer driving.
Crude oil inventories rose by 1.7 million barrels for the week ended August 1st but are still 11.8% below 2007 levels. Refiner capacity fell to 87% utilization. Favorable weather conditions for the week allowed crude imports to rise by 200,000 bpd. That will not be the case with next week's inventory report with tankers parking at sea ahead as tropical storm Edouard moved through the gulf.
U.S. gasoline prices fell to $3.88 per gallon and -23.4 cents off the all time high set on July 7th. Diesel fell to $4.50 and -26 cents off the all time high. Despite the headline on gasoline demand being down -2.3% over last year, last week was the strongest demand week of the summer at 9.484 million barrels per day. The last two weeks have seen a sharp increase in consumption once the price dropped below $4 per gallon. Personally $3.90 or $4.10 does not make much difference to me, it is still high, but demand did rise. It is possible those putting off summer trips in hopes of cheaper gas finally decided they were running out of summer and bit the bullet. School starts here in Colorado next week so vacations are over.
The Turkish section of the Baku-Tbilisi-Ceyhan pipeline was shutdown this week after a fire caused damage. The pipeline transports one million barrels per day from Azerbaijan's Caspian Sea to allow exports to the west without crossing Russia and Iran. The shutdown should be temporary but prices did firm slightly on the news.
Oil prices fell to $117.10 by late morning and that helped lift the markets out of a slump caused by massive losses at Fannie Mae. Prices high a high of $120.45 only an hour earlier. Trading in energy has been extremely volatile of late and has become costly for undercapitalized traders with tight stops. Crude is trading at $119 as of 3:AM ET Thursday morning.