U.S. Oil Demand Increases After months in Decline
The U.S. oil market seems to be getting back on its feet. With oil price getting back to its former price, the oil demand is steadily increasing as well. For months now, the Asian market has been a helping hand in keeping the global oil market alive, especially for the U.S. market.
With the stabilization of global oil demand and production, domestic refiners are processing the most crude oil since the economy's massive halt in March. The increase in demand is due to the vaccine-driven boost, which is planned for this summer. Without a doubt, this will help the U.S. oil market recover from the hit it took during the pandemic.
West Texas Intermediate crude is one of the domestic refiners that has seen a significant increase in demand. The price has picked up at least 50 cents a barrel compared to a few weeks ago, today being close to $60 a barrel. In comparison, Brent crude in London has gone up to $63 a barrel.
With the current extreme cold weather affecting Texas, propane and oil, fuels used in mobile heating devices, the demand is expected to increase further. Of course, the harsh weather conditions may affect Texas's oil production, primarily Midland, Texas, a critical U.S. shale production area. Well shutdowns, disrupted road transport, and power outages can impact the current output.
After dozens of drillers reduced their budgets and filed for bankruptcy back in 2020, which took two million barrels a day off the U.S. oil market, this demand increase will significantly boost the economy. The U.S. government sees production recovering to 11.5 million barrels a day in 2022, not as much as before the pandemic (13.1 million barrels a day) but still a significant increase in oil demand.
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