U.S. crude stocks in the Strategic Petroleum Reserve (SPR) fell to 577.5 million barrels, the lowest since July 2002.
RED President Steve Hendrickson examines the U.S. imports of Russian crude and petroleum products plus the likelihood of losing those volumes.
Oil marched relentlessly higher beyond $110/bbl on March 2, responding to a flood of divestment from Russian oil assets by major companies and expectations that the market will remain short of supply for months to come.
“The Cushing situation is getting worrisome,” said John Kilduff, partner at Again Capital LLC. “That's supportive of the contract.”
Cushing’s importance to the market has waned in recent years as producers send more inventories to the U.S. Gulf for export, but it is still notable as it is the delivery point for U.S. crude futures.
Overall, the mild softness in oil demand witnessed in early January due to the Omicron coronavirus variant seems to have passed, analysts say.
Distillate shortfalls will continue to exert upward pressure on oil prices until Saudi Arabia and U.S. shale producers raise their output faster, or more likely until the economy enters a slowdown, writes Senior Market Analyst John Kemp.
“As we drift towards the three-year low in U.S. storage levels, it justifies the pop we are seeing in the market,” said Bob Yawger, director of energy futures at Mizuho.
Overall product supplied—a measure of demand—surged again, putting the four-week moving average at 21.2 million bbl/d, ahead of pre-pandemic trends.
Crude inventories in the U.S. rose by 515,000 barrels in the week to Jan. 14 to 413.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 938,000-barrel drop.