Oil prices fell about 1 percent March 9, the biggest drop this year. Record U.S. crude inventories added to fears of a global glut on world oil markets.
Crude oil stocks in the United States surged last week to 528.4 million barrels, an all-time high and up 8.2 million barrels . Inventories are almost 8% higher than last year.
So far in 2017 the EIA says gasoline supplied is 5.4% lower versus 2016.
Even though we are using less gasoline – oil prices have been rising on the expectation that the US economy and the world would be using more oil.
In the past few days oil has plunged to below $50 and “speculators are heading for the exits” according to press reports.
Trump has vowed to deregulate the oil and coal industries with the expectation this would help increase production and encourage the industries to hire more workers But that will work only in a rising price environment. Adding more oil to a to a satiated market is no unlike adding kerosene to a fire.
Baker Hughes says the US rig count was 392 a year ago but has increased 7 weeks in a row to 609.
While production is up in places like Texas the EIA says the largest production decline in 2016 on a percentage basis occurred in the Federal Offshore Pacific, where production declined 44% in 2015, due in part to a pipeline disruption in May 2015. Think Refugio were the pipeline connect to the offshore rigs is still shut down.