As U.S. supplies of crude oil fell for the third straight week on continued weak imports and near-record export shipments out of the Gulf, crude oil is seeing its highest prices since the March sell-off and its historic price inversion into negative territory.
Some 2.2 million barrels were moved out of the strategic petroleum reserve into the commercial market to meet demand, which has been picking up amidst signs of economic recovery and global reopening plans as some countries have checked the spread of COVID-19. The move represents a fundamental shift, from missing demand pushing spot prices into the negative to recent demand growth requiring a drawdown of reserves.
Although over-the-road demand for commuters and airline travel demand for jet fuel remains sluggish, industrial demand for crude appears to be returning. Likewise, natural gas prices have recovered to nearly $2.2 per million BTU and remain in full carry in terms of market structure.