It appears that the increase in demand that followed the collapse in crude oil prices around the end of last year is about over. In California, highway traffic rose by 2.6% year-over-year in May, the same rate as the growth in April. The prior two months showed stronger growth, and the current growth rate is nearly the same as the long-term average of 2.5%. The situation is much the same in Texas.
Across the country, the U.S. Energy Information Administration reports that based on a four-week average, finished motor gasoline production is down from 10.16 million barrels in the same period last year to 9.78 million barrels this year. Partly that is due to rising prices, which have grown from a U.S. average of $2.04 in late January to $2.81 last week. And even though that is about $0.90 a gallon less than U.S. drivers paid in late June last year, gasoline price moves are relative and most of us remember only that gas was cheaper in February, not that it was a lot more expensive a year ago.
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For crude oil, this has resulted in a price that wobbles around $60 a barrel for West Texas Intermediate (WTI) and $65 a barrel for Brent. WTI for August delivery closed at $59.65 on Friday, about 30 cents below its price the previous Friday, which was about 20 cents below the price on Friday two weeks ago.
The number of rigs drilling for oil in North America fell by 930 year-over-year and fell by three week-over-week. The natural gas rig count increased by five to a total of 228. The rig count for natural gas rigs is down by 86 year-over-year.
U.S. crude stockpiles fell by 4.9 million barrels last week, the eighth consecutive weekly decrease. Gasoline stockpiles rose slightly as refineries raised run levels to 94% of capacity, up about 250,000 barrels a day from the previous week. Gasoline inventories remain in the upper half of the five-year average range.
Hedge funds — under the Managed Money heading in the Commodity Futures Trading Commission (CFTC) Commitments of Traders report — cut their long positions last week by just 465 contracts and raised their short positions by 2,772. The movement reflects changes as of the June 23 settlement date. Managed money holds 297,027 long positions, compared with 61,220 short positions.
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Among the producers themselves, short positions outnumber longs 372,730 to 198,644. The number of short positions last week fell by 13,578 contracts, and longs dropped by 12,583 positions. Positions among swaps dealers show 353,377 shorts versus 182,504 longs. Swaps dealers cut just 157 contracts from their long positions last week and added 4,911 short contracts.
Two states lost three rigs last week: North Dakota and Ohio. Texas lost one, while Louisiana added six and New Mexico and West Virginia added one each. The rest were unchanged.
In the Permian Basin of west Texas and southeastern New Mexico, the rig count fell by two to 231. The Eagle Ford Basin in south Texas lost one rig to finish the week with a count of 103, and the Williston Basin (Bakken) in North Dakota and Montana has 74 working rigs, down three from the prior week.
Enterprise Products Partners L.P. (NYSE: EPD) lists a posted price of $56.08 per barrel for WTI and a June 27 price of $51.63 a barrel for North Dakota Light Sweet, as well as a posted price of $55.88 a barrel for Eagle Ford crude. All prices are about $0.02 a barrel higher than they were a week ago.
The pump price of gasoline ticked down slightly week-over-week. Saturday morning’s average price in the United States was $2.779 a gallon, down about 0.5% from $2.795 a week ago.
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