U.S. petroleum demand climbed higher for a second consecutive week and oil inventories declined in tandem, the U.S. Energy Information Administration (EIA) said Wednesday.
EIA said in its Weekly Petroleum Status Report (WPSR) that overall petroleum demand for the period ended May 21 rose 3.5% week/week after jumping 10% a week earlier, lifted by mounting demand for gasoline and a surge in consumption of jet fuel. Demand for gasoline last week increased 3% from the prior week, while jet fuel demand bounced 18% higher.
U.S. oil refinery inputs averaged 15.2 million b/d last week. That was 123,000 b/d more than the prior week. Refineries operated at 87% of their operable capacity last week, on par with the prior week and up substantially from 71% a year earlier.
The gains come as coronavirus vaccination programs advance – about half of American adults are now fully inoculated, according to federal data – and travel restrictions ease.
Analysts expect the favorable trajectory to continue. “The summer seasonal demand trends will be amplified as economies reopen and demand for refined products, particularly gasoline, improves,” Rystad Energy analyst Louise Dickson said.
Total petroleum products supplied – EIA’s terminology for demand – averaged 19.1 million b/d over the past four weeks, up 18% from the same period last year. In that span, gasoline consumption increased 29% year/year and demand for jet fuel more than doubled, according to the WSPR.
Meanwhile, U.S. commercial crude inventories — excluding those in the Strategic Petroleum Reserve — decreased by 1.7 million bbl from the previous week. At 484.3 million bbl, U.S. crude inventories are 2% below the five-year average.
Increased demand contributed to the weekly decline. Lower imports also were a factor. Oil imports averaged 6.3 million b/d last week, down 138,000 b/d from the previous week.
Flat U.S. crude output also played a role. Production for the latest week held at 11.0 million b/d, EIA said. Output was about 2.1 million b/d below the 2020 high last March.
Demand is also expected to mount globally over the summer months.
The Organization of Petroleum Exporting Countries this month projected oil demand would increase by nearly 6.0 million b/d from last year, or 7%, to average 96.5 million b/d in 2021. The International Energy Agency this month estimated demand would rise by 5.4 million b/d this year.
West Texas Intermediate oil climbed above $66/bbl after the EIA report was released Wednesday morning. Brent crude also gained ground, exceeding $68. Brent is expected to climb higher this summer and could average $70 this year with demand expected to continue gaining momentum, Raymond James analysts said.
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