US Energy Information Administration data for the week to 29 May showed crude oil inventories fell by 7.974 million barrels. That compared with market expectations for a 4 million-barrel draw.
The larger-than-forecast decline implies a sharper weekly reduction in stocks than anticipated, based on the EIA release for the period. The report framed the move as a deeper draw versus consensus estimates for the same week.
Inventory Draw Signals Strong Demand
We see the recent crude oil inventory draw of nearly 8 million barrels as a strong bullish signal, as it significantly surpassed market expectations. This suggests demand is running hotter than many had modeled heading into the summer. The market appears to have underestimated current consumption levels.
This aligns with the start of the summer driving season, which historically boosts fuel consumption. We note that recent travel data for the Memorial Day holiday showed a 4% increase in vehicle miles traveled compared to 2025, pointing to robust gasoline demand. This trend will likely continue to pull crude stockpiles lower in the coming weeks.
Supply Dynamics and Market Implications
On the supply side, we are not expecting any surprises that could offset this demand. Key OPEC+ members have reaffirmed their commitment to maintaining production quotas through the third quarter to ensure market stability. This supply discipline provides a firm floor for prices.
We are also watching U.S. refinery utilization rates, which have now climbed to 95.1%, the highest level this year. This high level of activity is necessary to meet fuel demand and will continue to be a significant driver of crude draws. The economic backdrop remains supportive, with the latest ISM Manufacturing PMI for May holding in expansionary territory at 53.1.
Given these dynamics, we are positioning for higher crude prices over the next four to six weeks. We are looking at buying August WTI call options to capitalize on this expected upward momentum. Selling out-of-the-money puts is also a viable strategy to collect premium while maintaining this bullish outlook.
