|Crude oil inventories (weekly change)||-2.2M barrels||-3.9M barrels|
|Gasoline (weekly change)||-1.1M barrels||0.4M barrels|
|Distillates (weekly change)||-2.5M barrels||1.5M barrels|
The mega glut in oil appears to be easing with inventories, which had climbed steadily since the beginning of the year, down for a second week, 2.2 million barrels lower at 484.8 million barrels in the May 8 week. In another plus, inventories for both gasoline and distillates fell, down 1.1 million barrels and 2.5 million respectively. Still, inventories are very heavy with oil near an 80-year high and gasoline well above its average upper limit.
WTI shot 25 cents higher to $61.75 in immediate reaction to the data but is now falling back and testing support at $61 even.
The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced here or abroad. The level of inventories helps determine prices for petroleum products.
Petroleum product prices are determined by supply and demand - just like any other good and service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in crude oil prices - or price increases for a wide variety of petroleum products such as gasoline or heating oil. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much. During a period of sluggish economic activity, demand for crude oil may not be as strong. If inventories are rising, this may push down oil prices.
Crude oil is an important commodity in the global market. Prices fluctuate depending on supply and demand conditions in the world. Since oil is such an important part of the economy, it can also help determine the direction of inflation. In the U.S., consumer prices have moderated whenever oil prices have fallen, but have accelerated when oil prices have risen.
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