Despite positive news about the U.S. economy, oil prices continued to decline yesterday, due to a strengthening dollar and OPEC’s announcement that they will not cut production, as they believe that the oil demand will continue to increase. Data does not support this demand, especially in light of China’s economic issues. During Q2, OPEC produced over 31 million bpd, which is 3 million bpd over demand, forcing the excess production into storage around the world. The decrease yesterday was widespread, as commodities had their worst day since 2011.
Gasoline demand remains high and U.S. refineries continue to struggle to keep up, despite running at high utilization. Refineries are expected to run at near full capacity throughout the remainder of the summer with motorists traveling record miles due to low gas prices and seasonal driving patterns. U.S. is still importing approximately 600,000 bpd of gasoline, which is typical to meet summer demand.
On Thursday, the U.S. Senate Energy Committee passed a bill to lift the 40-year ban on the export of crude. However, it is likely that this bill will struggle to make it through the full Senate with Democrats fearing that lifting the ban may lead to higher gasoline prices in the U.S. Many believe that Democratic support is crucial to gain President Obama’s support to exportcrude.