May 20, 2022
Barrels of crude oil

Increased exports to European markets have seen US fuel prices rise faster than crude oil prices over the past month, as the effects of Russia’s invasion of Ukraine on the US economy continue to build.

US refined product exports have averaged 6.3 million barrels per day over the past four weeks, a rate not far off being the highest in the nation’s history. The surge in exports has come as a result of US support for European countries seeking to reduce their energy dependence on Russia.

With major producers such as OPEC only ramping up crude production slowly it will take time for global stockpiles to increase. The tightness in fuel markets is even greater cause for concern because it shows that the release of millions of barrels from US strategic reserves has done little to meet demand.

Stockpiles of crude, gasoline and other fuels have been running low, due in part to increased demand as countries relaxed pandemic measures and exacerbated by Russia’s attack on its neighbor and the subsequent sanctions that put a further squeeze on supplies.

Inventories are particularly tight for distillates, with the US Energy Information Administration advising availability of 105 million barrels, the lowest level since April 2008.

US crude futures have risen nearly 17% since Moscow sent troops into Ukraine on February 4th, while US gasoline futures have jumped by more than 30%.

US crude price rises have been curbed somewhat by the release from the strategic reserves, but have also been limited by concerns over energy demand during the lockdowns crippling several Chinese cities.