Despite the surge in coronavirus cases in recent weeks, crude oil demand in the United States could be on track to increase in the coming months as inventories have been steadily declining since their peak levels in the summer. Total U.S. stocks of gasoline and diesel are still trending above their five-year averages, but the oversupply has considerably shrunk since June-July when inventories had built at a fast pace due to the lockdowns in the first COVID-19 wave.

U.S. refiners have managed to reduce the glut in diesel stocks, which weighed heavily on the market three months ago. Refiners have maximized the production of light distillates such as gasoline at the expense of middle distillates such as diesel while curbing overall crude oil processing rates since April.

Now refiners may have to boost crude oil inputs over the coming months and produce more middle distillates than they did over the past months, to prevent diesel inventories from drawing down too much, Reuters market analyst John Kemp writes in a recent column.

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Source: Oil Price