U.S. crude oil and fuel stockpiles fell last week as demand jumped, the Energy Information Administration said on Wednesday, further exacerbating tight world supplies following Russia’s invasion of Ukraine.
Commercial crude inventories fell by 2.5 million barrels in the week to March 18 to 413.4 million barrels, even as the United States released 4.2 million barrels from its Strategic Petroleum Reserves (SPR), a signal of strong demand from both U.S. refineries and international buyers.
Both gasoline and distillate stocks fell in the most recent week while product supplied – a rough proxy for demand – jumped 400,000 barrels per day (bpd) to 21.1 million bpd.
U.S. gasoline stocks fell 2.9 million barrels to 238 million barrels, while distillate inventories , which include diesel and heating oil, decreased 2.1 million barrels.
“Draws across the board constitute a very bullish report, especially given we tapped the SPR in this report. Refiners are storming back with utilization and the crack spreads have been terrific. It should give consumers some relief that there is supply being manufactured,” said John Kilduff, partner at Again Capital in New York.
Oil prices extended their gains after the data, with U.S. crude trading $5.88, or 5.4%, higher on the day at $115.13 a barrel by 10:55 a.m. EDT (1455 GMT), while Brent rose by $6.40, or 5.6%, to $121.89.
Prices have been surging in recent days once again as the world confronts a sharp drawdown in available supply due to heavy sanctions on Russia from the United States and its allies.
Worldwide demand for crude was also visible in U.S. exports of crude, which rose to 3.8 million bpd, their highest since July 2021, and as refinery utilization rose on the U.S. Gulf Coast hub to its highest level since January 2020, operating at 94.3% of capacity.
Overall, refinery utilization rates rose 0.7 percentage point to 91.1% of capacity, surpassing 90% for the first time since August, and crude runs increased by 277,000 bpd in the week, the EIA said.
U.S. weekly crude production was unchanged at 11.6 million bpd, holding the same rate for a seventh week, the EIA said.
The U.S. energy secretary said this week the Biden administration believes producers will boost U.S. oil supply by the end of the year in the wake of the Russian invasion.