Us crude oil inventories are falling at their fastest pace in decades as demand continues to rebound, driving up the oil futures market.
Over the past four weeks, total U.S. crude oil stocks, including the Strategic Petroleum Reserve, have fallen at a rate of 1.15 million barrels a day, the largest four-week rolling decline since the data were available to the U.S. Energy Information Administration in 1982. Meanwhile, term spreads on the New York Mercantile Exchange rose on Wednesday, with September WTI contracts trading at a premium of $1 a barrel over October contracts for the second time this month, suggesting that supply is expected to remain tight throughout the summer.
The record decline in crude oil inventories highlights the strength of the recovery in US oil demand. OPEC and its allies will hold a key meeting on Thursday to discuss increasing production.
As the United States ends its months-long blockade, more and more Americans are traveling by car or by air. To meet demand, refinery operating rates have risen to pre-pandemic levels. Earlier this month, California, the most populous state in the United States, reopened, and New York ended most of the restrictions.
Meanwhile, American oil companies have been slow to respond to oil prices, which have risen by more than 50% this year. Domestic crude oil production is about 15% lower than its peak at the beginning of last year.
Inventory levels in Cushing, Oklahoma, provide further support for the maturity premium, where WTI futures are delivered. Inventories here are at their lowest level in more than a year. Analysts expect traders to bet that supply will fall to a multi-year low by the end of the summer.
Previously, the spread between the second and third WTI contracts has not exceeded $1 a barrel since 2018.
Although Europe's recovery from the public health crisis has not been smooth, overseas interest in US crude oil has also been rising. Us crude oil exports remain strong, although the WTI spread over Brent, the global benchmark, has narrowed to less than $2 a barrel.