U.S. oil demand is finally starting to emerge from the grips of pandemic after months with Asia serving as the lone bright spot in the global market market. American refiners are processing the most crude since the economy ground to a halt in March in anticipation of a vaccine-driven boost in gasoline demand this summer. The uptick means that the refiners are competing for domestic barrels that for months were sent to more robust markets in Asia. Prices for cargoes of grades like West Texas Intermediate crude have picked up by at least 50 cents a barrel from earlier this month.
As domestic oil demand recovers, it could meet with supply shortages. Economic-driven output declines took about 2 million barrels a day of local crude off the market from the peak of 13.1 million, after dozens of drillers slashed budgets and filed for bankruptcy. The U.S. government sees production recovering to only 11.5 million barrels a day in 2022.