Last week was particularly worrisome for oil, since U.S. fuel inventories (distillate stocks) rose during a time of year when analysts expected a drop. The American fuel glut continues due to weak demand, and as shown below, is far worse than anything seen in recent years.
Even if U.S. fuel demand picks up with the economy, the U.S. will first have to work down its massive distillate stocks before needing more oil. This process will keep a lid on America’s contribution to world oil demand.
(Chart via Goldman Sachs, Energy Market Update, 16 November 2009)
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