The focus on the U.S. rig counts is intense as ever. Traders who never really cared about rig counts are now focusing on them more closely. U.S. rig counts kept falling last week at a record pace but the drop off was not as deep as some traders expected. The count fell by 48 units yet it was the smallest drop since the OPEC price war went all out. As far as oil products are concerned they are seeing support as the refinery strike expands and refineries may shutdown early for maintenance as demand shows signs of rising.
Crude oil prices fell after Baker Hughes reported that the U.S. oil-rig count fell by 37 to 1,019. Another surprise was when the U.S. offshore rig count increased to 54, up two rigs from last week giving bears a little momentum on oil. Yet products are a different story. Heating oil in the front month are rallying of cold weather and the fact that refineries are going on strike.
The United Steelworkers union refinery strike expands as talks won't resume for a couple of days. Some refineries may be pressured into early maintence and some governments will request that refineries shutdown for safety reasons because of the strike. Workers at the largest refinery in the United States, the Motiva Enterprises refinery in Port Arthur, Texas, went on strike followed by strikes at two other refineries. The USW represents workers at 65 refineries that produce about two-thirds of the oil in the United States.
This comes as U.S. oil demand continues to rise. Bloomberg News reported that "U.S. fuel consumption in January increased to the highest level for the month since 2008 as the economy grew, the American Petroleum Institute said. Total deliveries of petroleum products, a measure of consumption, climbed 1.5% from a year earlier to 19.2 million barrels a day last month, the industry-funded group said Friday. Demand increased for gasoline and jet fuel, while consumption of distillate fuel, a category that includes diesel and heating oil, dropped.
Trilby Lundberg report that the average price of a regular gallon of gas jumped 13 cents in the past two weeks to $2.33 and 26 cents in the last 2 weeks. The strike is to blame. Natural gas is getting a boost on the cold and the fact that Baker Hughes reported that natural gas rigs were down 11 to 289.