Demand for oil in the United States increases as travel increases; Oil inventories also on the rise
Oil consumption rose in the United States last week amid rising gasoline and distillate production, the US Energy Information Agency (EIA) said on Wednesday.
Demand reached 22.4 million b/d for the period ended January 21, representing a 2.3% week/week increase. The overall gain largely stems from a 3.4% increase in gasoline consumption and a 4.3% jump in distillate fuels, which includes diesel, according to the latest EIA report. Weekly oil status report.
Total petroleum products supplied over the past four weeks – the EIA’s main demand indicator – averaged 21.2 million bpd, up about 12% from the same period in 2021. Over the past four weeks, motor gasoline consumption has averaged 8.2 million b/d. d, up 6.1%, while distillate demand averaged 4.2 million b/d, up 14.5%. Jet fuel product supplied jumped 24.5% to around 1.5 million bpd.
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West Texas Intermediate oil price was $85.16/barrel on Jan. 21, $1.34 higher than the previous week’s price and $32.88 higher than a year ago, said the EIA.
“The case for higher prices tends to get a little shoddy as storage builds challenge the low inventory story,” said Robert Yawger of Mizuho Securities USA, director of Energy Futures.
For the period to January 21, US crude oil production fell slightly from around 100,000 bpd to 11.6 million bpd. Domestic production remains more than a million barrels per day below pre-pandemic levels.
EIA data showed a 2.4 million barrel per week increase in U.S. commercial crude oil inventories, which ended last week at 416.2 million barrels. Domestic crude inventories ended last week around 8% lower than the five-year average for this time of year.
Last week’s construction bucks a general downward trend in crude inventories seen by the EIA.
Some oil bulls have predicted that oil prices will cross the $100/bbl threshold this year.
Globally, the International Energy Agency recently upgraded its 2022 oil demand outlook.
“The bullish momentum is primarily driven by military tensions and uncertainty in the Middle East and Eastern Europe, where continued uncertainty surrounding Russia and Ukraine could jeopardize a significant portion of oil flows. if diplomatic talks break down and energy export sanctions materialize,” said senior oil markets analyst Louise Dickson of Rystad Energy.
She added that oil benchmarks are up, showing some “immunity to inflation”, despite news that the Federal Reserve (Fed) may raise interest rates in March, a move that would normally exercise downward pressure on prices.
“The Fed’s announcement of a minor change in US monetary policy is unlikely to immediately or even significantly drive up commodity prices, as other supply-side constraints outweigh its impact,” Dickson said.
The oil market‘s focus should shift from the Fed to the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, Dickson said. She explained that OPEC-plus would meet next week and the market would look for signals from the rally regarding the lifting of the supply squeeze and the easing of oil prices.
OPEC-plus “underdelivered its stated production targets by hundreds of thousands of barrels and pledged to play a passive role in the conversation despite external pressure primarily from the United States to increase production and reduce fuel prices,” Dickson said.
She also noted that OPEC-plus is expected to provide “the supply boost that could calm markets and stifle demand for more output” when it meets as scheduled on Wednesday, February 2, Saudi Arabia, first producer of unused capacity, taking command. role..