Petroleum consumption increased in the United States last week amid rising gasoline and distillate production, the U.S. Energy Information Administration (EIA) said Wednesday.

Demand hit 22.4 million b/d for the period ended Jan. 21, representing a 2.3% week/week increase. The overall gain stemmed largely from a 3.4% increase in gasoline consumption and a 4.3% jump in distillate fuels, which include diesel, according to EIA’s latest Weekly Petroleum Status Report.

Total petroleum products supplied over the last four-week period – EIA’s key gauge of demand — averaged 21.2 million b/d, up about 12% from the same period in 2021. During the past four weeks, motor gasoline consumption averaged 8.2 million b/d, up 6.1%, while distillate fuel demand averaged 4.2 million b/d, up 14.5%. Jet fuel product supplied jumped 24.5% to about 1.5 million b/d.

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The West Texas Intermediate oil price was $85.16/bbl on Jan. 21, or $1.34 above the previous week’s price and $32.88 more than a year ago, EIA said.

“The argument for higher prices tends to get a bit sloppier as storage builds challenge the low stockpile story,” said Mizuho Securities USA’s Robert Yawger, director of Energy Futures.

For the Jan. 21 period, U.S. crude oil production edged slightly downward by about 100,000 b/d to 11.6 million b/d. Domestic production remains more than 1 million b/d below pre-pandemic highs.

EIA data showed a 2.4 million bbl week/week build in U.S. commercial crude oil inventories, which finished last week at 416.2 million bbl. Domestic crude stocks ended last week about 8% below the five-year average for this time of year.

Last week’s build bucks an overall downward trend in crude stocks that EIA has observed. 

Some oil bulls have predicted that oil prices will cross the $100/bbl threshold this year.

On a global scale, the International Energy Agency recently revised its 2022 oil demand outlook upward.

“The bullish momentum is primarily driven by military tensions and uncertainty in the Middle East and Eastern Europe, where the continued uncertainty surrounding Russia and Ukraine could jeopardize a significant portion of Russian oil flows should diplomatic talks break down and energy exports sanctions materialize,” said Rystad Energy’s Louise Dickson, senior Oil Markets analyst .

She added that oil benchmarks are rising, showing some “inflation immunity,” despite news that the Federal Reserve (Fed) may increase interest rates in March, a move that normally would place downside pressure on prices.

“The Fed’s announcement of a minor tweak to U.S. monetary policy is unlikely to drag down rising commodity prices immediately or even impactfully, as other supply-side constraints outweigh its impact,” Dickson said.

The oil market’s attention should shift from the Fed to the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, said Dickson. She explained OPEC-plus will meet next week, and the market will look for signals from the gathering regarding lifting supply tightness and easing oil prices.

OPEC-plus “has underdelivered against its stated production targets by hundreds of thousands of barrels and has committed to a passive role in the conversation despite external pressures primarily from the U.S to increase production and ease fuel prices,” Dickson said. 

She also noted that OPEC-plus would need to provide the “supply impetus that could calm markets and quell the demand for more production” when it meets as planned on Wednesday (Feb. 2), with top spare capacity producer Saudi Arabia taking the commanding role..