American oil producers were active by 2022 standards last week. However, total output held flat for the third straight period and remained far below pre-pandemic levels, the U.S. Energy Information Administration (EIA) said Wednesday.

Production for the week ending April 29 totaled 11.9 million b/d, according to EIA. That was on par with the high mark of this year and consistent with the two prior EIA report periods. It also was notably above the 11.6 million b/d level at which output held most of the first quarter, the agency’s latest Weekly Petroleum Status Report showed.

However, exploration and production (E&P) companies are forging ahead gingerly amid investor pressure to preserve cash and shift more resources to renewable energy projects. Recent pullbacks in demand, too, give U.S E&Ps reason for caution, despite global supply worries caused by Russia’s invasion of Ukraine.

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Total consumption of petroleum products dipped lower last week, a period during which blizzards wreaked havoc in the Northern Plains and Rockies. In addition, tornadoes peppered the central and southern reaches of the country, impacting demand for travel fuels.

Consumption fell 2% week/week to 19.5 million b/d.

Choppy Demand

Demand has proven choppy this year after already lofty fuel prices were jolted even higher by the war in Ukraine. Total products supplied over the last four-week period averaged 19.3 million b/d, down 3% from the same period last year, EIA said.

Following bouts of lighter demand, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 1.3 million bbl from the previous week. Still, after a robust rebound in consumption last year, at 415.7 million bbl, stocks are 15% below the five-year average.

International supplies are vulnerable, too.

The United States banned Russian oil and gas imports in objection to the Ukraine conflict. Along with several rounds of Western economic sanctions that wounded the Kremlin-controlled energy complex, Russia’s crude exports have declined by an estimated 1 billion b/d.

The European Union (EU), moving with haste to sever ties with the Kremlin following its invasion of Ukraine, proposed Wednesday an embargo on Russian crude within six months. Should all 27 EU members vote in favor, it could further jolt global oil supplies. 

Prior to the war, EIA data show, the EU was importing between 3.0 million b/d and 3.5 million b/d from Russia.

According to media reports, EU officials in Brussels, where members of the bloc were meeting, said they hoped for a decision about the potential ban this week. 

Price Rally

The added threats to supply fueled a rally in global oil prices, with West Texas Intermediate and Brent crude prices both climbing Wednesday. Both were already well above $100/bbl.

“With most commodity markets already experiencing tight supply, the war in Ukraine ignited a strong rally on top of prices that were already high, and justifiably so,” said Societe Generale Group analyst Michael Haigh.

However, global demand has tapered this spring in response to high prices and amid widespread lockdowns in China to combat new coronavirus outbreaks. The war, too, has created uncertainty in Europe, International Energy Agency (IEA) researchers have noted.

IEA in April said it expected demand to average 99.4 million b/d in 2022. That would mark an increase of 1.9 million b/d from 2021, but the latest estimate was down by 260,000 b/d from an earlier forecast.

OPEC researchers in April also revised their forecast for global oil demand, lowering it by about 500,000 b/d. They cited both the pandemic and lighter economic growth in Asia. Still, the cartel said consumption this year would grow by 3.7 million b/d to 100.5 million b/d.

The cartel and its allies, known as OPEC-plus, were scheduled to meet Thursday to decide whether to further boost production.

OPEC-plus previously agreed to production increases of about 400,000 b/d into May. This has been policy since last August, though it represents a measured unwinding of the nearly 10 million b/d in cuts made in 2020 in response to the initial demand destruction imposed by the pandemic.