The US oil inventory report is coming up at the bottom of the hour and there will continue to be a focus on the implied gasoline demand numbers. That metric is one of the reasons that oil has been so weak in the past month but there's an ongoing debate about how reliable the numbers are.
Today's US retail sales data adds to that debate. It showed gasoline station sales at $73,510,000,000 which was down from $75,318,000,000. That's demand destruction, right?
No, it's the opposite. It's a 2.4% decline but it came at the same time as a 7.7% decline in gasoline prices. That points to an increase in gasoline sales volumes. That starkly contrasts with implied demand numbers showing a decline in July to below July-2020 levels.
That's more in line with some of the private data, which has shown ongoing growth in gasoline demand, which is the normal seasonal trend.
Now gas station sales also include things sold inside the gas station, like chocolate bars and lottery tickets, so it's not a perfect comparison. Still, the data points that show ongoing strong demand for gasoline are adding up.
The next question is: How much did that demand destruction story really weigh on oil prices? We're now watching Iran for a considerable supply increase, the SPR continues to drain and Russian oil appears to be getting out. Chinese demand also remains sluggish, although the OPEC leader today said that was overstated.
At the same time, RBC reports that net positioning in futures and options is at the most-bearish since April 2020 (when oil went negative) and it's been a rapid shift.
In any case, WTI crude oil is up 49-cents to $87.03 today with EIA data to come. The API numbers from late yesterday were:
- Crude -448K
- Gasoline -4480K
- Distillates -759K
- Cushing +250K
