Oil: Don’t Look Now But. . .

One of my go-to persons on energy is John Kemp, a London-based analyst. (Follow him on Twitter, or you can get on his email list if you like.) His note today examines U.S. oil stocks, and guess what? Our oil sticks are rapidly depleting, in what Kemp calls “the biggest oil shock since the 1970s”

U.S. petroleum inventories are depleting to critically low levels as output fails to keep pace with the rapid rebound in consumption after the pandemic, putting intense upward pressure on oil prices.

Petroleum inventories were depleting at an unsustainable rate even beforeRussia’s invasion of Ukraine and the disruption of Russia’s petroleum exports in response.

U.S. inventories of crude oil and refined products outside the strategic petroleum reserve have fallen in 63 out of the last 88 weeks according to data from the Energy Information Administration (EIA).

Commercial stocks have depleted by a total of 315 million barrels since the middle of 2020, more than offsetting the 204 million barrels accumulated during the first wave of the pandemic and lockdowns.

This chart from his latest chartbook likely portends much more pain at the pump ahead.

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