Crude oil climbs amid supply reports

U.S. crude prices climbed into late May as traders confronted two supply signals at once: a shrinking U.S. inventory cushion and continued disruption tied to the Middle East war. The U.S. Energy Information Administration said on May 20 that commercial crude inventories fell by 7.9 million barrels in the latest week, while Reuters reported on May 22 that investors were still doubting the chances of a breakthrough in U.S.-Iran talks. West Texas Intermediate was $108.99 a barrel on May 15, according to the EIA’s weekly highlights, up $10.12 from a week earlier. The move fed a broader market debate over whether higher energy costs could keep inflation pressure alive. ### Why are traders focused on U.S. stockpiles? The EIA said on May 20 that U.S. commercial crude inventories, excluding the Strategic Petroleum Reserve, fell to 445.0 million barrels in the week ended May 15. That left inventories about 2% below the five-year average for this time of year, while total commercial petroleum inventories fell by 9.0 million barrels. (eia.gov) The same EIA report showed refinery inputs averaging 16.3 million barrels a day and refinery utilization at 91.6% of operable capacity. Gasoline inventories fell by 1.5 million barrels and were 5% below the five-year average, while distillate inventories rose by 0.4 million barrels but remained about 9% below the seasonal average. ### What did the government data say about prices? (eia.gov) The EIA said West Texas Intermediate crude was $108.99 per barrel on May 15. The agency also said the New York Harbor spot price for conventional gasoline was $3.794 a gallon, while the national average retail gasoline price was $4.490 a gallon on May 18. Those price levels matter because oil feeds directly into fuel costs and freight costs. (eia.gov) World Bank Chief Economist Indermit Gill said on April 28 that the Middle East war was hitting the global economy “first through higher energy prices, then higher food prices, and finally, higher inflation.” ### How much of this is about geopolitics rather than domestic supply? Reuters reported from Tokyo on May 22 that U.S. crude futures rose more than $1 in early trade because investors doubted the prospects for a breakthrough in U.S.-Iran peace talks. Reuters said the two sides remained stuck over Tehran’s uranium stockpile and controls on the Strait of Hormuz. (worldbank.org) The International Energy Agency said in its April Oil Market Report that shipping through the Strait of Hormuz had plunged and created what it called the largest disruption to oil supply in history. The IEA said global oil supply fell by 10.1 million barrels a day in March to 97 million barrels a day, while OPEC+ production dropped 9.4 million barrels a day month over month. (msn.com) ### Why are some investors talking about inflation again? The World Bank said on April 28 that energy prices were projected to surge 24% in 2026, and that overall commodity prices were forecast to rise 16% this year. The bank said Brent crude could average $86 a barrel in 2026 if the most acute disruptions ease in May and shipping gradually returns to pre-war levels by late 2026. (iea.org) That backdrop helps explain why oil rallies are being linked to inflation worries across markets. Higher crude prices can lift gasoline, diesel and petrochemical costs, and the World Bank said those pressures risk slower growth alongside firmer inflation. ### What should traders watch next? (worldbank.org) May 28 is the next scheduled release date for the EIA’s Weekly Petroleum Status Report. Traders will also be watching whether U.S.-Iran talks produce any change in shipping risk around the Strait of Hormuz, which remains central to supply expectations in reports from Reuters, the IEA and the World Bank. (eia.gov) (worldbank.org)