Crude: Seasonal bottom pick

October 9, 2017 09:36 AM
Daily Energy Market Analysis

U.S. oil exports have surged to a record of close to 2 million barrels a day as the U.S. rig count fell by 2 to 748 last week as the overall count fell by 4. That is another sign that producers are pulling back. It’s not just the storm because the pullback in rig counts are global. 

Not only the U.S. rig count but the International rig count fell as well. The international offshore rig count for September 2017 was 190, down 11 from the 201 counted in August 2017, and down 31 from the 221 counted in September 2016. The average US rig count for September 2017 was 940, down 7 from the 947 counted in August 2017, and up 431 from the 509 counted in September 2016. The average Canadian rig count for September 2017 was 210, down 7 from the 217 counted in August 2017, and up 69 from the 141 counted in September 2016.

The worldwide rig count for September 2017 was 2,081, down 35 from the 2,116 counted in August 2017, and up 497 from the 1,584 counted in September 2016.

Less of your paycheck is going to gasoline the Energy Information Administration (EIA) reports that the average U.S. household expenditure on gasoline in 2017 is expected to total $1,977, or approximately 2.4% of many incomes of households, according to projections in EIA’s most recent Short-Term Energy Outlook (STEO). The most recent peak for household gasoline expenditures was $2,715, or 4.0% of household income, in 2008. More recently, average household gasoline expenditures in 2015 and 2016 were near or below $2,000, or 2.5% of total household income.

Household gasoline expenditures have fluctuated over the past 10 years as a result of changes in gasoline prices and consumption. When gasoline prices are relatively high, more of a household’s income is devoted to gasoline expenditures, leading to lower gasoline consumption and efforts to improve vehicle fuel economy.

Declines in gasoline prices since 2012, however, have led to increases in vehicle travel and increases in gasoline consumption. Based on EIA’s latest STEO projections, continued low gasoline prices are expected to lead to record-high gasoline consumption of 9.3 million barrels per day for 2017.

Lower gasoline prices have contributed to decreasing household gasoline expenditures since 2012, as gasoline consumption has generally increased. STEO estimates that gasoline prices will average $2.48 per gallon in 2017, which is 33% lower than the price in 2012.

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About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets.