This week the EIA reported that oil inventories dropped 5 million barrels to the lowest since 2018. This drop in inventory, along with the highest all-time demand, has led to ongoing market tightness and is most likely to remain this way for the foreseeable future.
Yesterday, news from the U.S. Energy Information Agency (EIA) shined a light on current inventory levels that have not been this low since 2018. Crude oil inventories dropped by 4.8 million barrels to 410.4 million barrels. This inventory fall combined with the past four weeks of product supplied being 21.9 barrels per day has now let demand hit an all-time high. Recently refiners have been ramping up activity due to a need to keep up with growing demand, so until this balances out, markets will be expected to remain tight. Accompanying high demand and inventory lows are the threats happening in the United Arab Emirates that seem to not be slowing down.
These threats have been going on for a while now but were escalated during the Houthi drone attack that saw over ten people killed in January. The market is continuously concerned with the threats to UAE supply, but there is now more pressure given the situation on the Ukrainian border. Just today, more Saudi troops intercepted drones launching from the Yemen border injured more than a dozen. As the situation in Saudi Arabia continues to unfold following the most recent Houthi attacks, it is clear that the overall supply and demand chain for oil is not looking extremely positive at the moment. Still, we could start to see some pressure lifted as all eyes turn to the Iran-U.S. talks the rest of the week.