After selling the fact that Tropical Storm Gordon did not do any major damage to oil facilities, the market now is seeing a US shoulder season that is still seeing very impressive refinery demand. While the oil market is being held back by worries and fears right now, the economic signals are backing up those greater fears.

The American Petroleum Institute (API) reported that US crude supply fell by 1.2 million barrels last week in a strong sign that US refiners, despite going into maintenance season, are still processing an incredible amount of crude oil. Even as the API reported a 631,000 barrel increase in supply, it was still less than the whisper number and even with the increase, supplies at the delivery hub are still well below average.

The products did increase with the API reporting a 1 million barrel increase in gasoline supply, and a much larger than expected 1.8 million barrel increase in distillate supply. Yet, the increases do not really signal a lack of demand, but to the contrary, refiners are increasing supply to meet what should be record product export demand.

Now there are some that are worried about contagion in the emerging markets and a possible slowdown in the global economy, but we predict that those fears are being overblown. The U.S. stock market is a key indicator. Despite all the trade war fears and tariff talk it continues to play the long game that could signal another strong leg up in the U.S. economy as we head into the end of the year. In fact, I would say the stock market doom and gloomers that have consistently got their heads handed to them will be close to throwing in the towel if we don’t get our traditional September stock market sell-off.

Today, we do get a public comment period on possible U.S. tariffs on another $200 billion of Chinese goods, with expectations that the U.S. will impose the additional levies, according to Reuters. While that is roiling Asian markets, we have not really seen any sign that their oil demand is being impacted. In fact, if you bought oil on tariff talk price drops, it was a buying opportunity almost every time.