Save for later Print Download Share LinkedIn Twitter Already low inventories of crude and refined products must drain further to meet peak summer oil demand. That points to higher prices unless material demand destruction kicks in. Inventories are at multiyear lows, with the situation particularly dire for refined products. Tanks will not refill as refiners can not meet rising summer demand. Low storage levels have already pushed prices for diesel, gasoline, jet fuel and fuel oil to record highs. Uncertainty over Russia’s ability to export its products in the face of a possible EU ban has added volatility to the trade. Such a ban could push an already tight market into panic mode. Energy Intelligence reckons that OECD commercial inventories dropped by 20 million barrels in April. Crude added 9 million bbl to just over 1 billion bbl, but product inventories fell 29 million bbl to 1.6 billion bbl. OECD forward demand cover dropped to 55 days in April from 56.8 in March — the lowest demand cover since the summer of 2008, when Brent traded around $130 per barrel versus $110/bbl now. OECD diesel stocks of 468 million bbl were their lowest in 17 years. US diesel stocks of 104 million bbl were the lowest since 2008 — and they have been draining fast as US refiners export diesel to Latin America and ship more to Europe to help offset 400,000 b/d in lost Russian product exports.
