Oil Rallies After Two-Day Rout as US Fuel Inventories Plunge

May 11, 2022 by Bloomberg
image is BloomburgMedia_RBNC1ADWRGG101_11-05-2022_16-00-08_637878240000000000.jpg

Oil jumped to near $105 after slumping for two days, extending gains after a US government report showed fuel inventories plunging to fresh record lows.

Oil jumped to near $105 after slumping for two days, extending gains after a US government report showed fuel inventories plunging to fresh record lows. 

West Texas Intermediate futures rallied more than $5 after falling below $100 a barrel on Tuesday. Covid infections in Shanghai and Beijing dropped on Tuesday, providing cautious optimism for improvement. In the US, the Energy Information Administration reported that distillate inventories fell to the lowest since May 2005, while gasoline supplies in New York Harbor dropped to the lowest since 2015.

Oil is experiencing one of its most tumultuous trading periods ever as the war in Ukraine and the ensuing sanctions against Russia push volatility to historic levels. The oil market hasn’t been “consistent at all as of late,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “Trading crude right now is like trying to figure out the mood swings of a teenager. It can feel like a futile endeavor.”

  

No Relief at Pump as US Fuel Prices Keep Climbing Higher: Chart

The oil market has been whipsawed over the last couple of months by Covid-19 restrictions across China and Russia’s invasion of Ukraine. The war has fanned inflation, driving up the cost of everything from food to fuels. In the US, consumer prices rose more than expected, indicating inflation will persist at elevated levels for longer. 

US retail gasoline and diesel prices rallied to a record just ahead of the nation’s summer driving season. Demand for both products fell domestically last week but inventories continued to empty amid higher exports with US refiners filling the void amid a lack of Russian supply. 

Traders continue to monitor the EU’s efforts to reach an agreement on sanctions on Russian oil imports. On Wednesday, Hungary said it will only agree if shipments via pipelines are excluded.

Shanghai reported a 51% drop in new coronavirus infections on Tuesday, with zero cases found in the community -- a key metric for the city to end a punishing lockdown that’s snarled global supply chains and left tens of millions of people stuck inside their homes for about six weeks.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

By Julia Fanzeres

Back To Top