This morning crude oil saw prices fall for the first day this week, and some oil production is returning to the market. Mexico has specifically ramped up its oil production this week following an incident Sunday, shifting market trends. This morning crude oil opened at $68.00, diesel at $2.1160, and gasoline at $2.2913.
The Energy Information Administration (EIA) said that crude inventories fell this week for a third straight week while overall fuel demand peaked highest since March 2020. Last week crude oil inventories fell by 3 million bbl and are currently 6% below the seasonal average. The optimism within the numbers lies in the fact that gasoline demand has increased, as shown last week, from 239,000 b/d to 9.57 million b/d. Labor Day weekend is just around the corner, and gas sales are expected to skyrocket for the entirety of next weekend. However, last week OPIS reported that same-station gasoline transactions were down by 1.5%, showing that this increase in retail prices is causing some demand destruction. With higher prices at gas stations comes the hesitancy of consumers to purchase fuel; however, vacation time coming next weekend, it seems as though many people will be purchasing fuel regardless.
On Sunday, a fire on an offshore platform in Mexico raised concerns when oil production was brought to a pause. This fire killed at least five and has shut in around 400,000 barrels per day (bpd) of production. Since Sunday, Pemex has been losing about $25 million per day from crude oil alone. The positive is that steps have been made to recover about 71,000 bpd of production and add another 110,000 bpd by the end of today to catch up with losses incurred during the unpredicted fire.
Looking ahead to next week, the Organization of the Petroleum Exporting Counties (OPEC) will meet on Wednesday, September 1st, to discuss what their policies say about adding more barrels to the market. This comes after the United States has called on OPEC to help the global economy by adding more barrels.