The oil-demand recovery story is faltering
Oil struggles continue. WTI down 11-cents to $37.21
My base case at the moment is that a series of isolated events are creating a mirage of risk aversion:
- Brexit worries
- Tech mini-bubble bursting
- Oil falling
The third on the list is the most worrisome. Oil demand is a great measure of the real economy and the reopening. Oil bulls should be comforted by the explosion in car sales during the pandemic but at the moment, it's not translating into gasoline demand.
The weekly EIA gasoline supplied data, a proxy for consumer demand, continues to hover around ~90% of the five-year demand average for the last nine weeks. Last week's data (which arguably should have been boosted by labor day weekend stocking of secondary sources, such as retail stations) also failed to show an improvement, and with the summer driving season behind us in North America, the recovery in oil demand remains frayed with uncertainty.