Wednesday brought another big drop in U.S. crude-oil inventories, as well as an eye-catching slump in the country's production:
A million barrels per day coming off the market would be bullish for oil prices if it weren't just the result of a storm passing through -- and that's what happened last week. Hence, oil prices actually fell slightly on Wednesday morning once the Energy Information Administration's weekly data dump had been digested.
One set of figures in particular may have fed into this reaction: demand.
Weekly demand estimates from the EIA are notoriously subject to revision. However, the trend in those numbers isn't encouraging for oil bulls.
Estimated oil demand in 2017 looks good relative to the five-year average, especially for the summer. Overall, though, growth versus 2016 looks pretty minimal.
The pattern is clearer if you take the weekly data and use it to calculate average daily consumption for the year to date and compare it to prior years. This smooths out the seasonal impacts and also adjusts for the differences in dates for the weekly updates each year:
The EIA data suggest daily oil demand in the U.S. is up by almost 8 percent versus 2012.
However, three-quarters of that growth occurred in 2015 and 2016, before leveling off sharply. That pattern just happens to coincide with oil prices tumbling in late 2014 before recovering from their trough in 2016 to stabilize around the end of last year.
In other words, as oil bulls focus on signs of supply being curbed to prop up prices, they shouldn't forget what that does to demand.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the editor responsible for this story:
Mark Gongloff at email@example.com