U.S. Petroleum Consumption Leads, Production Lags Behind

Commodities:

• WTI crude oil spot prices decreased -10.9% MoM but remained higher by +52.7% YoY and +19.6% YoY2.  Prices declined because of uncertainty around demand due to the Omicron variant. 
• Brent crude oil spot prices fell -9.3% MoM, however remained elevated by +49.5% YoY and +10.6% YoY2. Brent crude oil prices typically adopt a similar path to WTI crude oil prices.
• U.S. retail gasoline prices declined -2.6% MoM, yet continued to be higher by +48.9% YoY and +28.9% YoY2. As crude oil prices largely determine retail gasoline prices, gasoline prices followed the developments in crude oil.
• U.S. diesel retail prices dropped -2.5% MoM despite sustaining an upward trend in the long-term, registering +40.6% YoY and +19.1% YoY2. 
• Henry Hub natural gas prices sank -24.3% MoM, even though it was higher by +45.6% YoY and +72.0% YoY2. Prices suffered after updated weather forecasts released by the government projected a warmer-than-expected winter. 

Production:

• U.S. oil rig count climbed + 3.6% MoM and accelerated +82.8% YoY, signaling an expansion in oil drilling activity. Measured against pre-pandemic levels, rig count remains lower by -29.5%.  

• U.S. crude oil production increased +1.9% MoM and +6.3% YoY, yet it was under -8.8% compared to the pre-pandemic era.
• U.S. shale oil production held steady at +1.0% MoM and +2.2% YoY. While currently beneath pre-pandemic levels by -9.9%, production is expected to maintain the same pace over the next month.
• U.S. motor gasoline production descended -3.0% MoM but is higher by +10.5% YoY. Nonetheless, it was lower by -3.8% compared to pre-pandemic times.
• Employees in the Oil & Gas Extraction sector grew moderately at +1.6% MoM, +3.9% YoY and +1.8% YoY2.

Inventory:

• U.S. crude oil stocks reduced slightly at -1.7% MoM, but more significantly at -10.2% YoY and -5.1% YoY2. 

Demand: 

• Overall U.S. petroleum consumption increased +1.7% MoM (+10.5% YoY/+3.4% YoY2), surpassing the pre-pandemic era, fueled by the winter heating season. Propane and propylene consumption soared +18.6% MoM/ +4.3% YoY/ +18.1% YoY2 from seasonal demand. Additionally, refiners adjusted to accommodate stronger demand for gasoline (-1.0% MoM/+14.3% YoY /-0.8% YoY2), in comparison to jet fuel (-5.4% MoM/ +20.6% YoY / -17.8% YoY2).