The rig count is again proving a reliable predictor of lower 48 oil production, as this week's increase of 12,000 barrels per day reinforces a shallow upward trend since the bottom in August '16. Increased drilling activity, especially in the Permian Basin, and the encouraging initial production results, should amplify the production recovery in '17, barring a deterioration in prices.
At the same time, the strong YOY growth in unleaded fuel demand through the first half of '16 is now a memory, with this week's demand and the 4 week average both comparable to their 2015 levels. Highway miles continue to increase, so this may be a manifestation of fuel efficiency. Regardless, as oil production increases and demand stagnates, imports should fall by operation of math.