National crude oil inventories fell 8.0 million barrels last week, the U.S. Energy Information Administration (EIA) said on Wednesday, bringing inventories below the five-year average for the first time in 2021.
It also marked the first drop in three weeks and the biggest drop since January. It materialized when imports plunged in the week ended April 30, after weeks of increases, the EIA said in its Weekly State of Oil Report (WPSR).
At 485.1 million barrels, inventories are 2% below the five-year average.
U.S. crude imports averaged 5.5 million bpd last week, down 1.2 million bpd from the previous week, the EIA said. Over the past four weeks, imports have averaged around 5.8 million b / d, 8% more than the comparable period in 2020.
Domestic production, meanwhile, averaged 10.9 million b / d last week, stable from the previous week and down about 1.0 million b / d from the previous week. at the level of the previous year, the agency said.
Total oil demand fell 3.5% last week, as gasoline consumption fell from recent highs in 2021. But overall oil demand is significantly stronger than it was in the middle. the immediate throes of last spring’s pandemic, and it was about 30% higher the week of April 30 compared to a year earlier, according to the WSPR.
Analysts said domestic demand was increasing as coronavirus vaccination programs progressed. More than 40% of the U.S. population is fully vaccinated, the Centers for Disease Control and Prevention said this week. Expectations are growing for an increase in global demand this summer, as vaccinations become more widespread in Europe and Asia, paving the way for a rebound in international travel and an increase in demand for jet fuel.
Oil prices have rebounded in recent weeks on such expectations, with Brent and West Texas Intermediate prices hovering around their highest levels since 2019. Both made further gains after the EIA data was released on Wednesday. morning.
“The bullish momentum in oil prices appears to be here to stay as traders maintain their strong expectations that global demand will grow very soon, outstripping supply,” said Louise Dickson, analyst at Rystad Energy.
While oil prices are high, Dickson added, the economic incentive remains to reduce storage this spring “instead of waiting for a higher oil price in the future.”
A sign that other countries are bracing for increased demand, U.S. crude exports surged to 4.1 million bpd last week, up 62% from the previous week and reaching the highest level. high since before the pandemic in early 2020.
Anticipating increased demand, the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, this month launched a program to increase production that could add more than 2 million bpd to the market. by July.
Citing an increase in travel and transportation fuel consumption forecasts, OPEC recently forecast an increase in crude demand of 5.95 million bpd this year. The cartel warned, however, that outbreaks of the virus in India and other parts of the world were adding uncertainty to the projections.
In addition, the International Energy Agency recently raised its world oil consumption forecast this year of 230,000 b / d for an increase of 5.7 million b / d. The Paris-based organization has estimated that demand for oil in 2021 will reach 96.7 million bpd.
Amidst improving demand, Raymond James & Associates analyst Pavel Molchanov said his team expects a “further rise” in oil prices “in the second half of 2021, en route to a cyclical peak in 2022 ”.