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Fuel demand exceeded expectations, which was positive news for energy traders. The release of 2.9 million barrels from the Strategic Petroleum Reserve added to the crude build-up.
U.S. Energy Information Administration (EIA) reported a surprising build-up in U.S. crude stocks last week, despite forecasts for a drawdown. At the same time, fuel demand exceeded expectations, which was encouraging news for energy traders, who are hoping for greater consumption in anticipation of the typical summer surge in travel by road, air, and sea.
According to the EIA data, crude stocks increased by 2.9 million barrels for the week ending May 5, compared to a previous drawdown of 1.280 million barrels for the week ending April 28. This was contrary to the expectations of industry analysts who had predicted an inventory slide of 0.917 million barrels for the latest week. However, the crude build-up comes with a caveat: the release of 2.9 million barrels from the Strategic Petroleum Reserve. Without this release, inventory balances might have remained virtually unchanged.
U.S. crude releases have challenged oil bulls as the Biden administration seeks to moderate market optimism and limit oil price increases and adding to already high inflation.
On the other hand, gasoline, the No. 1 U.S. fuel product, saw a drawdown of 4.17 million barrels, versus expectations for a drop of just 0.808 million barrels. In the previous week to April 28, distillates saw a deficit of 1.191 million barrels. Distillates, which are refined into jet fuel, diesel for trucks, buses, trains, and ships, account for the majority of retail oil sales in the United States.
The latest EIA report showed that U.S. crude stocks rose unexpectedly last week, despite analysts’ predictions of a drawdown. However, fuel demand exceeded expectations, which was positive news for energy traders. The release of 2.9 million barrels from the Strategic Petroleum Reserve added to the crude build-up. In contrast, gasoline saw a significant drawdown, while distillates remained the strongest component of the U.S. petroleum complex in terms of demand.