Putting Out Fire, With Gasoline
The following are comments by Paul Horsnell and his team at Barclays Capital Research. Because I couldn’t say it any better myself, I have posted the comments in their entirety:
Japan and the US have been the main sources of weakness in global oil demand this year. With the improvement in US demand, at least everywhere except in the middle of the barrel, the weakness in Japan had become even starker. However, the latest Japanese monthly numbers show the first strength this year, with the sharp improvement led by gasoline demand.
We remain somewhat downbeat on the scale of oil demand growth in 2010, although the recent flow of global data has shown an upside oil demand surprise, leading us to cut the expected scale of global demand decline in 2009. We now expect global oil data to fall by 1.55 mb/d this year, which is some 1 mb/d better than consensus put the fall when at its most bearish.
US distillate inventories continue their now highly counter-seasonal increase, leading us to reiterate last week’s desire to avoid any positive distillate exposure at this point. The strength of the data remains in crude and in the improvement in top of the barrel demand. In stark contrast to diesel, gasoline demand finished September and started October at parity with the all-time record highs for demand in those months.
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