Crude oil prices fell slightly today after the Energy Information Administration reported inventories had risen by 8.5 million barrels in the week to May 6.
This compared with an inventory build of 1.3 million barrels estimated for the previous week, which provided a brief relief for prices.
In fuels, as distillate stocks reach a critically low level, the EIA reported inventory draws.
In gasoline, the authority estimated an inventory draw of 3.6 million barrels for the week to May 6. This compared with a draw of 2.2 million barrels during the previous week.
Gasoline prices hit an all-time high earlier this week, with the national average topping 4.35 per gallon, according to GasBuddy.
Gasoline production last week averaged 9.7 million barrels daily, a slight increase on a week earlier, the EIA also said.
In troubled middle distillates, the authority estimated an inventory decline of 900,000 barrels for last week, which would likely add to the upward pressure on prices.
Distillate stocks in the United States have dropped to the lowest level in 14 years and 23 percent lower than pre-pandemic levels, and prices are soaring, boosting refiners’ margins.
At the same time, rising diesel prices are adding substantially to inflationary pressure in the U.S. as it is diesel-fueled trucks that deliver most of the goods sold across the States.
Distillate production has been hovering around 5 million bpd for months now and last week was no exception. Refineries churned out 4.9 million bpd of middle distillates daily, which compared with 4.7 million bpd during the previous week.
With margins as high as $50 per barrel thanks to the imbalance in the middle distillate market, refiners should be motivated to boost production but it appears to be taking time. This means prices are likely to remain elevated for a while yet, especially as summer driving season kicks into gear and gasoline demand, theoretically, also soars.
By Irina Slav for Oilprice.com
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