Seasonality can be an important factor for commodities investors and that could particularly true this year for oil.
While the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, have notched some impressive 2018 returns, the next couple of months could be trying for crude on a seasonal basis.
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“Any hit to refinery demand would cause inventories to balloon, particularly as the U.S. ramps up production. The Energy Information Administration estimated on Wednesday that the U.S. surpassed Russia and Saudi Arabia as the world’s largest producer of crude oil,” reports CNBC.
Other factors contributing to oil’s surge this year was the U.S. exploring the possibility of tapping into their emergency reserves to stymie disruptions in oil supply, notably the slashing of Iranian oil imports. The U.S. is currently pumping oil at record levels of around 11 million barrels per day.
Autumn Issues for Energy Demand
Data confirm that the summer months usually mark peak energy demand in a typical year.