© Reuters.

By Barani Krishnan

Investing.com — The Biden administration is keeping to its promise of winding down its use of the U.S oil reserve, helping  in the country fall the most in a week since the highs of pre-pandemic demand as refiners pumped out fuel products to the hilt.

Crude prices jumped almost 3% on the day, continuing their recovery since the start of this week, after the U.S. Energy Information Administration, or EIA, reported a of 12.58 million barrels for the week ended Nov. 25. 

It was the biggest crude drawdown since the outflow of 12.79M barrels during the week ended June 21, 2019, historical EIA data showed.

New York-traded crude for January delivery was at $80.55 per barrel , up $2.35, or 3%, on the day. Just on Monday, the U.S. crude benchmark sank to $73.61, its lowest since December 2021. Notwithstanding its rebound of the past three days, WTI closed November down about 7%.

London-traded crude for February settled at $86.97 per barrel, versus Tuesday’s settlement of $84.25. Brent hit an 11-month low on Monday, sinking to $80.83. The global crude benchmark finished November down 8%.

With Wednesday’s EIA data release, the market’s focus next is on Friday’s — which could decide the Dec. 14 by the Federal Reserve. 

Beyond that will be Sunday’s meeting of the Organization of the Petroleum Exporting Countries and its allies, as players await to see if the 23-nation coalition led by Saudi Arabia with Russia’s help will resort to deeper production cuts than the 2M barrels per day called by the group.   

U.S. crude inventories had already been falling prior to the November 25 week, dropping by a combined 9M barrels over two prior weeks.

The Biden administration, meanwhile, drew just 1.4M barrels from the Strategic Petroleum Reserve, or SPR, last week, way below the weekly draw of 6M barrels averaged from the reserve over the past two months.  

The administration has drawn some 200M barrels from the SPR over the past year to provide relief to an undersupplied global crude market, in an effort to lower U.S. pump prices of gasoline which hit record highs of $5 a gallon in mid-June. 

The effort paid off, and U.S. pump prices are now at around $3.50 a gallon. The trade-off was the SPR reaching its lowest levels since March 1984, with the stockpile at 389.1M barrels at the close of last week, the EIA said.

While crude stockpiles tumbled last week, fuel products saw substantial builds last week as refiners ran at 93% of capacity, pushing out more supply than immediately needed.

“Refineries are running ultra-hard right now — near seasonal records — as crack spreads make for a windfall,” analyst Adam Button wrote in a commentary posted on the ForexLive forum. 

Crack spreads, which refer to refining profit margins, stood at $59 per barrel for distillates and at $19 a barrel for gasoline, data showed — well below March/April highs but substantially higher than pandemic-era levels.

, the number one automobile fuel in the United States, saw a build of 2.77M barrels last week, adding to the 5.2M barrel increase over two prior weeks.

, which are refined into diesel for trucks, buses, trains and ships as well as fuel for jets, rose by 3.55M barrels last week, adding to the net increase of around 3.0M barrels seen over six previous weeks.

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