Oil holds jump as US fuel stockpiles slide before driving season

Oil held steady in Asia after surging the most in four weeks as US fuel inventories shrank ahead of the summer driving season.

West Texas Intermediate futures traded near $106 a barrel after jumping about 6 per cent on Wednesday. US distillate stockpiles – a category that includes diesel – fell to the lowest level since May 2005 last week, while gasoline supplies slid for a sixth week, according to the Energy Information Administration.

While fuel demand fell domestically last week, inventories are shrinking as US refiners export more products to cover a shortfall of Russian barrels. Buyers are shunning energy from the OPEC+ producer due to the Ukraine crisis, which has upended trade flows and led to higher volatility in the oil market.

Oil is up around 40 per cent this year following a strong economic rebound from the pandemic, though prices have been whipsawed since late February due the crisis in Ukraine and a Covid-19 outbreak in China. The International Energy Agency will provide its snapshot of the overall market later Thursday.

US distillate inventories fell by 913,000 barrels last week to 104 million barrels, according to EIA data released on Wednesday.

Crude stockpiles rose by 8.5 million barrels. The US driving season starts at the end of this month.