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U.S. Oil And Gas Figures Point To Economic Momentum

A proxy for market demand is up 20 percent compared to a year ago.
The post U.S. Oil And Gas Figures Point To Economic Momentum appeared first on Zenger News.

A drain on commercial crude oil inventories suggests economic activity in the United States is recovering after last year’s pandemic slowdown, analysts told Zenger News.

The U.S. Energy Information Administration, part of the Energy Department, reported that total commercial crude oil inventories — a figure not counting oil stored in strategic reserves — declined by 5.9 million barrels in the week ending April 9.

A drain on inventories usually indicates an increase in demand. The pandemic in 2020 had led to an extraordinary decline in demand and left crude oil inventories in the United States bloated.

This time last year, the Energy Information Administration reported commercial crude oil inventories were approximately 6 percent above the five-year average.

In its Wednesday report, the agency said commercial crude oil inventories were now just 1 percent above the five-year average for this time of year.

Tamas Varga, an analyst at London oil broker PVM, told Zenger the report revealed a larger drain on inventories than expected.

“Refiners are ramping up utilization rate, hence the crude draw, and healthy demand figures helped product inventories draw,” he said.

Refined petroleum products also showed a decrease in storage levels. For gasoline, the inventories are actually 2 percent below the five-year range for this time of year. Distillate fuel, which includes diesel, remains 4 percent higher than the five-year average, but was lower week-on-week.

The drain across the board pushed crude oil prices sharply higher in Wednesday trading, with West Texas Intermediate, the U.S. benchmark for the price of oil, trading up as much as 5 percent during the day to move toward the $65 per barrel range.

Lower crude oil inventories suggests an economic recovery in the United States, after last year’s pandemic slowdown. (Zbynek Burival/Unsplash)

Federal energy data can raise questions at times, though Phil Flynn, an energy market analyst at The PRICE Futures Group in Chicago, said it makes sense given that U.S. crude oil production is actually on the decline, while global demand is rising.

“Upticks in gas and distillate demand suggest we should see a further tightening of crude inventories for weeks to come,” he added.

The total amount of petroleum products supplied to the market over the last four weeks is up 20 percent from this time last year. Total products supplied is used as a proxy for demand and the surge suggests the pandemic’s destruction of demand is fading in the rear-view mirror.

“I’m still optimistic on what’s ahead for summer here in the U.S.,” Abhi Rajendran, the director of research at Energy Intelligence, told Zenger from New York.

(Edited by Bryan Wilkes and Alex Willemyns)



The post U.S. Oil And Gas Figures Point To Economic Momentum appeared first on Zenger News.

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