U.S. oil inventories dried up, OPEC+ maintained its original production plan, and international oil prices continued to rise

U.
S.
oil inventories have dried up

With businesses reopening and domestic road and air travel resuming, U.
S.
oil consumption has returned to pre-pandemic levels
.
But due to lagging oil production and refining, U.
S.
oil inventories have dried up
.

Last week, total oil supplies to the U.
S.
domestic market averaged 20 million b/d, essentially the same as the five-year (2015-2019) seasonal average before the
pandemic.

Among the primary fuels, gasoline and distillates are at or slightly above pre-pandemic levels, while jet fuel remains slightly below pre-pandemic levels, reflecting continuing problems
in the aviation industry.
But refineries are processing about 5% less crude than before the pandemic, putting downward pressure
on refined product inventories.

As of the end of last week, gasoline inventories were 5 million barrels below the pre-pandemic seasonal average, while distillate stocks were 6 million barrels
lower, according to the EIA report.

In addition, domestic crude oil production in the United States is still well below pre-pandemic levels, which has increased the rate
of decline in crude oil inventories.

As of last week, U.
S.
commercial crude inventories were down 18 million barrels (4%) from the pre-pandemic average, with the worst shortfall concentrated in Cushing, where local inventories fell by 25 million barrels (48%)
.

Cushing is home to the delivery of crude oil futures contracts on the New York Mercantile Exchange (NYMEX), where severe shortages of crude inventories have pushed front-month futures prices to their second-highest spot premium in 10 years
.

More broadly, total U.
S.
inventories of crude and refined products, excluding the Strategic Petroleum Reserve, have fallen to their lowest level
since 2014.

But there are some early signs that the supply situation is stabilizing
.
First, the gap between U.
S.
crude and refined product inventories and the pre-pandemic five-year average has narrowed slightly since the end of September
.

Secondly, WTI futures for December 2021 delivery have been in a moderate downward trend since October 26, and the 6-month calendar spread has been decreasing since October 29, although it is too early
to determine whether this is a turning point or just a temporary correction.

Despite signs of recovery, the overall oil supply situation in the United States remains tight
.
Weak inventories mean that the US has little cushion in the event of output disruptions or stronger-than-expected consumption growth
.

Therefore, supply issues or unexpected strong demand could lead to a sharp rise in oil prices, as there is no spare capacity in the short term, unless OPEC+ can be persuaded to increase production
faster.

Although global oil demand is approaching pre-pandemic levels, OPEC+ has decided to keep its original production plan unchanged, rejecting U.
S.
calls
for accelerated production increases.
At the same time, Saudi Aramco continued to send bullish signals, raising official selling prices for all buyers of the country's crude oil, driving international oil prices higher
.
On Monday, the WTI December crude spot contract closed up $0.
66 at $81.
93 a barrel, and the Brent January crude spot contract closed up $0.
69 at $83.
43 a barrel
.

At present, the biggest upward impetus for oil prices still comes from the tight supply in the oil market and still strong demand, OPEC+ last week insisted on a 400,000 b/d production increase plan, did not meet the US demand for 600,000-800,000 b/d of production, in line
with market expectations.
Meanwhile, Saudi Aramco raised the price of Asian customers of Arab Light crude by $1.
40-2.
70 per barrel in December, the highest level since September, beating market expectations and sending a bullish signal
to global oil markets.

U.
S.
President Joe Biden on Saturday praised Congress for passing the long-delayed $1 trillion infrastructure bill, which could boost growth and fuel demand, and Pfizer's coronavirus liquid offers hope for curbing the epidemic, U.
S.
President Joe Biden said Pfizer's anti-coronavirus drugs are very promising, and Pfizer's anti-coronavirus drugs can "significantly reduce" the risk of
hospitalization and death due to new coronary pneumonia.
At the same time, jet fuel demand is expected to continue to grow
as more and more governments ease pandemic restrictions and boost air travel.

In order to suppress oil prices, Biden in the United States is "considering" the release of strategic petroleum reserves, bringing uncertainty to the supply side of crude oil, but the market expects that oil prices may not fall as much
as the White House expects.
Because sour crude may be released from government reserves, sour crude oil is not popular with refiners, and the amount of crude oil released may not be enough to hit oil prices
.
Meanwhile, China's crude oil imports plummeted to their lowest level since September 2018 in October as large state-owned refineries suspended purchases due to higher oil prices and independent refineries were subject to import quotas, limiting oil price gains to some extent
.

In general, the current market bullish sentiment is strong, the US Congress passed a $1 trillion infrastructure investment bill, Saudi Arabia raised the official price of crude oil in December, sending a bullish signal to the global crude oil market, which sent a bullish signal to the market, but the United States sent a signal to curb oil and gasoline prices, crude oil growth is expected to be limited, oil prices may continue to rise
slightly in the short term.