Fuels demand in the United States is rising faster than it has in over 40 years, despite stagnant domestic crude oil production. The U.S. oil stockpiles’ record-fast fall has begun to manifest in the crude oil futures market, where the American benchmark, WTI Crude, has risen by 50% so far this year. As a result, the disparity between the price of U.S. oil and the cost of Brent Crude, the international benchmark, has begun to diminish.
The reopening of many U.S. states and the start of the summer driving season have pushed Fuels usage to its highest level since the pandemic began in recent weeks. In addition, domestic airline traffic is also recovering. However, airport passenger throughput remains at around 80% of pre-pandemic levels. Thus, the market is tightening due to increased Fuels demand in the United States, and these bullish drivers for oil consumption have begun to show up in the U.S. oil futures market.
WTI oil prices have risen due to a strong recovery in demand in the United States. The Energy Information Administration (EIA) announced a 6.7 million barrel drop in crude oil inventories for the week ending June 25 this week. This was the sixth week in a row that oil inventories fell. According to Bloomberg estimates based on EIA data, the reduction in all U.S. oil inventories, including those in the Strategic Petroleum Reserve (SPR), has been at a rate of 1.15 million barrels per day (BPD) last four weeks.
According to EIA data, the most recent four-week decline in inventory was the largest on a rolling basis since 1982. Commercial crude oil inventories, excluding the SPR, were 452.3 million barrels for the week ending June 25. This is 15.2 percent lower than the same week last year and 3.4 percent lower than the same week in 2019, pre-pandemic, according to EIA data.