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In case you thought the whole reason for the drop in oil prices was either a drop in demand or a drop in speculation, This Week in Petroleum sheds some light on another cause:

Contrary to conventional wisdom about U.S. crude oil production, EIA?s November Short-Term Energy Outlook (STEO) predicts U.S. crude oil production will increase 8 percent from 2008 to 2009. 

Demand does continue to lag, with total products supplied down 7% compared to the same 4-week period in 2007 and jet fuel supplied down more than 20%. Gasoline is down by 2.2%, much less than the drop six weeks ago when prices were almost twice as high. Inventories continue to build with total commercial petroleum inventories, crude oil, gasoline and propane/propylene all increasing and distillate fuel inventories dropping.

US Petroleum Supplies and Refining At a Glance

• Total Petroleum Inventories: Up 2.7 million barrels
• Crude Oil Inventories: Up 1.6 million barrels
• Gasoline Inventories: Up 500,000 barrels
• Distillate Fuels Inventories: Down 1.5 million barrels
• Propane/propylene inventories: Up 100,000 barrels
• Refinery Crude Inputs: 14.6 million barrels/day
• Change: Up 95,000 barrels/day
• Refinery Activity: 84.9%

US Petroleum Demand At a Glance
Compared to Same 4-Week Period Last Year

• Total Products Supplied: Down 7.0%
• Gasoline: Down 2.2%
• Distillate Fuel: Down 3.3%
• Jet Fuel: Down 20.3%

Petroleum Status Report and This Week in Petroleum - November 20 2008 [PDF]

Full current report with data tables [PDF]