Jane Van Ryan
Posted May 13, 2009
If you're looking for a key indicator to illustrate the weakness in the U.S. economy, just look at oil demand. API's Monthly Statistical Report shows that total oil product deliveries (a measure of demand) in January-April 2009 were the lowest since 1998.
Here are some additional figures that provide some insight into the economy:
- Oil product demand was 3.6 percent lower in April than during the same month a year ago;
- Although gasoline consumption rose slightly in April, all other product deliveries fell;
- Domestic inventories of crude oil rose by 11 million barrels in April and have risen nearly 80 million barrels since last summer--for the largest increase in a similar period in more than 80 years;
- Gasoline imports, while lower than a year ago in April, are still at near-record levels for the year to date; and
- Inventories of distillate products--primarily diesel fuel and heating oil--ended the month 37 percent higher than in April a year ago.
With inventories rising, why have oil prices risen recently? According to some economists:
- The fundamentals of supply and demand. Oil is traded globally and the price is determined on the global markets. OPEC's production cuts have been greater than the decline in worldwide demand.
- The recent price upswing also might be fueled by optimism that the worst is over and economic recovery is on its way. We'll learn more when the federal government releases additional data in the next few days.
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