US distillate stockpiles rose for a second straight week, according to data from the Energy Information Administration (EIA) on Wednesday
WASHINGTON (Pakistan Point News / Sputnik - 25th May, 2022) US distillate stockpiles rose for a second straight week, according to data from the Energy Information Administration (EIA) on Wednesday.
The data suggests record high prices are beginning to cause demand destruction in the commodity used for turning out the diesel and other fuels needed by the commercial transportation.
Distillate inventories rose by 1.657 million barrels for the week that ended on May 20, on top of the 1.235-million increase seen in the prior week to May 13, the EIA said in its Weekly Petroleum Status Report.
Known as middle-of-the-barrel oil, distillates are refined into the diesel that runs trucks, buses, trains and ships, as well as the fuel needed to fly airplanes.
The back-to-back rise in distillate balances jarred with data from earlier in the year that showed virtually non-stop draws in the fuel's stockpiles each week as the commercial transportation sector emerged as the strongest growth component of the US fuels market.
"There's no doubt about it, at $6 per gallon, truckers and other diesel users are beginning to maximize what they get from a tank, cutting unnecessary burn wherever possible," John Kilduff, partner at New York energy hedge fund Again Capital, said. "That's directly causing a demand destruction in diesel."
Prices of diesel - along with that of gasoline, the number one automobile fuel in the United States, which is at record highs of above $4.50 per gallon - began rising in the middle of last year when global crude supplies began tightening amid the economic rebound from the coronavirus pandemic measures.
Since, the Russia-Ukraine crisis has exacerbated the supply deficiency in virtually all forms of energy products, sending prices of these commodities to multi-year highs in many countries. In the United States, the closure of several refineries during the height of the coronavirus pandemic has reduced US oil refining capacity as well, compounding the problem.
To alleviate the supply crisis and tamp down fuel prices - or at least prevent them from going ever higher�- the Biden administration has taken to withdrawing oil from the nation's emergency stockpile called the US Strategic Petroleum Reserve (SPR). As of last week, the SPR's balance stood at 532 million barrels, the lowest in almost 35 years, as the administration stepped up its weekly drawdown from the reserve to six million barrels from a prior three million.