U.S. implied consumer petroleum demand surged to an all-time high last week on the back of holiday demand and travel—even as the Omicron variant of coronavirus threatens to dent oil consumption in coming months.

Overall crude stockpiles fell due to rising exports, and inventories for gasoline and distillates were also down, the U.S. Energy Information Administration (EIA) said Dec. 15.

Product supplied by refineries, a proxy for demand, surged in the most recent week to 23.2 million bbl/d, due to gains in gasoline, diesel and other refined products. The less volatile four-week average was 21.3 million bbl/d, ahead of pre-pandemic levels, and the strongest in December since 2018.

Both supplies of gasoline and distillate—which includes diesel fuel—were exceeding 2019 levels as refiners have boosted output. Analysts said the rise reflects both expectations for a surge of people traveling for the holidays and the loosening of supply chain bottlenecks that has more trucks on the road delivering goods.

“It’s planes, trains and automobiles season,” said John Kilduff, partner at Again Capital LLC in New York. “People are trying to claim their lives back. Strong economics, strong employment coincides with strong gasoline demand no matter what the pump.”

Auto and air travel are expected to rise 34% from last year’s holiday season, according to the American Automobile Association, with about 109.5 million people on the move, though that figure is still short of 2019 levels.

Distillate demand rose sharply in the most recent week, up more than 1.3 million bbl/d in the most recent week, while the four-week average is now 8% higher than comparable 2019 levels. Gasoline demand, as measured by product supplied, is in line with 2019.

Andrew Lipow of Lipow Oil Associates in Houston warned that the volatility in the figures could mean next week’s numbers will drop off sharply. The Omicron coronavirus variant is also expected to cut demand in coming months.

Exports Jump Before Year-end

Crude inventories fell by 4.6 million barrels in the week to Dec. 10 to 428.3 million barrels, more than double expectations in a Reuters poll for a 2.1 million-barrel drop.

The decline in crude stocks was in part due to a sharp increase in exports, as net U.S. crude imports fell by 1.4 million bbl/d to 2.8 million bbl/d.

The sharp drop-off in imports may be in part due to year-end tax considerations, as many states and localities assess taxes on crude inventories held at the end of the year. As a result, companies look to ramp up exports and hold down imports to reduce their stocks, Smith said.

“Strong oil exports and subdued imports on the U.S. Gulf Coast have helped encourage a chunky draw to total oil inventories, as ad valorem tax considerations get underway,” he said.

The decline in overall commercial crude stocks came even as the United States made good on its announcement to release inventories from the national strategic reserve, which fell to its lowest level since late 2002.

U.S. gasoline stocks fell 719,000 barrels in the week, while distillate stockpiles fell by 2.9 million barrels.

Refinery crude runs fell by 115,000 bbl/d last week, EIA said. Refinery utilization rates were unchanged at 89.8% of nationwide capacity.

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