Crude oil prices gained sharply this week, hitting a one-month high after U.S. Energy Information Administration statistics showed a quick drawdown in supplies. In its weekly Petroleum Status Report, the EIA stated that U.S. crude oil inventories slid by 7.23 million barrels, a 1.8% drop in one week.
While the drawdown was partially prompted by increased refinery demand, inventories are also falling due to lower U.S. imports of foreign crude, which fell to a 17-year low this week. As domestic crude oil production has been rising, demand for foreign crude has been waning.
Meanwhile, there are increasing calls for the U.S. to begin exporting crude oil, which it hasn't done since the 1970's, before the Arab Oil Embargo. Recent comments by the U.S. energy secretary Ernest Moniz and other Obama administration officials have indicated that the government may lift the export ban, which would reverse nearly 40 years of U.S. energy policy.
As the market digested these factors over the past two weeks, crude oil prices gained more than $4 per barrel, pushing near $104.50 on Friday.
As the price of crude oil rose, so too did gasoline, which jumped over a nickel per gallon during the week. Higher gasoline prices are hitting at a bad time for most Americans, as the upcoming Memorial Day holiday is typically regarded as the beginning of the summer driving season.
Soybeans Sprout Higher
This week, soybean prices reached the highest level since last summer, shooting skyward as news broke of stronger Chinese demand. China is the world's biggest buyer of soybeans, and the Chinese buy most of their beans from the United States, making them the country most watched by soybean traders.
The primary driver behind Chinese demand has been rising meat consumption. As the Chinese population gains wealth, they have been eating more hogs, chickens, and other animals that are primarily fed a diet of corn and soybean meal. China is able to grow most of the corn it needs, but imports over 80% of its soybean needs.
As of midday Friday, soybeans for delivery in July were worth $15.13 per bushel, near the highest price since last July.