Crude Oil Holds Its Breath Ahead Of World Summits

Current levels of oil and petroleum products are high. Given that, what can explain such a surprising drop in US crude inventories?

Energy Market Updates

Commercial crude oil reserves in the United States fell much more than expected in the week ended March 18, according to figures released on Wednesday by the US Energy Information Administration (EIA).

US crude inventories have shrunk by more than 2.5 million barrels, which implies greater demand and is obviously another bullish factor for crude oil prices. Such a decline in inventories is particularly remarkable as the American strategic reserves have also recorded a significant drop. This is the 25th consecutive week of falling strategic reserves since the Biden administration started to make those adjustments in an attempt to relieve the market.

(Source: Investing.com)

WTI Crude Oil (CLK22) Futures (May contract, daily chart)

Furthermore, some additional figures extracted from the same EIA report were released and surprised the markets.

These are US Gasoline Reserves, which plunged by about 2.95 million barrels over a week, while the market was not even forecasting a two-million decline.

(Source: Investing.com)

Thus, US exports jumped by more than 30% compared to the previous week, not only due to large flows to Europe to replace Russian barrels, but also marked by a significant rebound in Asian demand.

RBOB Gasoline (RBJ22) Futures (April contract, daily chart)

Beware that a NATO summit, a G7 summit, and a European Union summit are being held on Thursday, when the various countries could set a new round of sanctions against Moscow.