The U.S. Energy Information Administration, the Energy Department's data cruncher, reported commercial crude oil in storage increased by 4.5 million barrels compared to the week ending May 19. But despite the rise, inventories are 2% below the five-year average for this time of year, suggesting demand is better than year-ago levels.
For gasoline, a refined petroleum product, data show inventories declined to drop to 8% below the five-year average. While the data set only runs to the week ending May 26, it does reflect some of the travel from the long Memorial Day holiday weekend.
Travel club AAA expected 42.3 million Americans to travel 50 miles or more, up 2.7 million, or 7%, from 2022, over the long weekend. Memorial Day weekend also marks the start of the unofficial summer travel season as families see fewer time restraints after the end of the regular school year.
Retail gasoline prices, meanwhile, have been unchanged over the last week and the national average retail price of $3.57 per gallon is $1.10 less than this time last year.
Confirming the swell in demand, the total amount of refined petroleum products sent to the market, an indicator of implied demand, averaged 20 million barrels per day over the four-week period ending May 26. That's up 2.3% from the same period last year.
For just motor gasoline, the total amount sent to the market is up 3.5% from year-ago levels.
Crude oil prices were running hot in the hour after the EIA's report was released. West Texas Intermediate, the U.S. benchmark for the price, was up nearly 4% in mid-day trading to claw its way back to the low $70 per barrel range.
Oil prices were hammered earlier in the week amid concerns about the fate of the proposal to prevent the U.S. government from defaulting on its debt obligations, though its fate in Congress so far suggests it will land on President Joe Biden's desk before a June 5 default.
The market optimism makes the weekend meeting of the Organization of the Petroleum Exporting Countries and non-member state allies more important. Saudi Arabia, the de facto head of the group known as OPEC+, lashed out at market pessimists recently, suggesting the group may cut production to lift oil price higher. Russia, however, has expressed reservations.
Ed Moya, a market analyst at New York brokerage OANDA, said it's anyone's guess on the next move from OPEC+.
"If prices remain significantly under pressure going into the weekend, the Saudis might try convincing the Russians to take part in some type of modest production cut," he said.
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