|Crude oil inventories (weekly change)||-3.6M barrels||1.2M barrels|
|Gasoline (weekly change)||0.8M barrels||0.1M barrels|
|Distillates (weekly change)||5.0M barrels||3.1M barrels|
A sizable 3.6 million barrel draw in weekly oil inventories is driving WTI sharply higher this morning. The draw, in data for the December 4 week, pulls inventories down to 485.9 million barrels and ends two months of uninterrupted builds. Domestic output slowed in the week while imports, despite the headline draw, still rose in the week.
Refineries are active and increased production in the week, feeding product builds of 0.8 million barrels for gasoline and 5.0 million barrels for distillates. But end-user indications point to easing demand with gasoline up only 0.7 percent year-on-year and distillates down 1.2 percent. WTI is up more than 50 cents near $38.90 in early reaction to the data.
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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