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U.S. energy demand is on the decline, federal data show
By Daniel J. Graeber

Recent federal data show the amount of refined petroleum products sent to the market, a proxy for demand, is on the decline despite signs of lower inflation. 

 Bill Greenblatt/UPI | License Photo

March 15 (UPI) -- Bloated crude oil inventories and a decline in the amount of petroleum products sent to the market suggest demand in the U.S. economy is faltering, Energy Department data from Wednesday show.

Data from the Energy Information Administration, the statistical arm of the Energy Department, showed that commercial crude oil inventories increased by about 1.6 million barrels during the week ending March 10.

Now at a total of 480.1 million barrels, domestic storage is 7% higher than the five-year average for this time of year. Globally, the Paris-based International Energy Agency put oil inventories for the 38 members of the Organization for Economic Cooperation and Development at an 18-month high.

In the U.S. economy, the total amount of refined petroleum products supplied over the four-week period ending March 10 declined by 6.4% relative to the same period last year. Economists use that metric as a proxy for demand.

RELATED February U.S. wholesale prices decline 0.1%, though banking concerns remain

Denton Cinquegrana, the chief oil analyst at the Oil Price Information Service, told UPI the product supplied figures are troubling.

"These are recessionary like numbers," he said.

Next week's forecast should indicate even more turmoil given emerging concerns of a banking crisis triggered by the collapse of Silicon Valley Bank in California.

"Some might wonder why a banking crisis is hitting oil so hard, as it is unlikely to impact crude demand and production," a research note emailed to UPI from Swiss investment bank UBS read. "But during periods of elevated volatility, investors tend to pull out of risky assets like oil and invest in safer corners of the market."

Elsewhere, while inflationary pressures in the U.S. economy are easing at both the retail and wholesale level, energy prices remain elevated. The all-energy component of the Consumer Price Index shows a 5.2% increase over the 12-month period ending in February.

Retail gasoline prices, meanwhile, are on the rise because of the adoption of the summer blend of gasoline, which is more expensive to make because of the additional steps needed to keep it from evaporating in warmer months.

Motor club AAA put the national average retail price at $3.46 per gallon, above levels closer to $3.00 at the start of the year.

That trend could increase. Data show domestic gasoline production was down from week-ago levels.