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Growing Exports and SPR Drawdowns Pressure US Petroleum Inventories, Wells Fargo Says

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Tightening US energy inventories and shrinking supply buffers could push gasoline prices higher in the coming months, Wells Fargo said Tuesday.

The US has benefited from its position as a net energy exporter, helping shield domestic markets from some immediate global supply disruptions, according to Wells Fargo.

Despite that advantage, interconnected energy markets leave the country exposed to the longer-term effects of supply disruptions and higher global energy prices, the firm added.

Growing exports have begun to reduce US energy inventories as higher domestic production and lower transportation risks reshape trade flows, Wells Fargo said.

A surge in exports, stronger refining activity, and an emergency release of 172 million barrels from the Strategic Petroleum Reserve have all reduced petroleum stockpiles this year, according to the firm.

Reduced inventories have weakened part of the US supply buffer ahead of the summer driving season, while seasonal demand could add further pressure, contributing to higher gasoline prices in the coming months.

With oil prices already elevated, investors may find better opportunities in Precious Metals and Industrial Metals rather than increasing exposure to the energy sector, the firm added.

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