U.S. crude oil storage dips below 5-year average as energy demand 'fell off a cliff'

May 3 (UPI) -- Storage levels of commercial crude oil dipped below the five-year average and data on the supply-side of the equation remains mixed, data show, while crude oil prices experienced a free fall on Wednesday.

The U.S. Energy Information Administration, the statistical arm of the Energy Department, showed the total amount of crude oil in storage declined by 1.3 million barrels over the last seven-day period.

U.S. commercial crude oil inventories had been a bit bloated, though recent data show storage levels are 2% below the five-year average for this time of year.

The situation is a bit mixed for refined petroleum products, however. Total motor gasoline inventories are about 6% above the five-year average, though distillates, a product line that includes diesel, is 12% below the five-year average for this time of year.

Edward Moya, a senior market analyst at OANDA, said in an emailed research note that data suggested demand "fell off a cliff" amid concerns about lackluster performance for the U.S. and Chinese economies, the two largest in the world.

China's post-pandemic rebound has been underwhelming, while recent data in the U.S. labor and housing markets point to trouble ahead.

WTI was trading at $78 one week ago. Moya added that bookings at Wyndham resorts are off, reflecting similar issues from the likes of Delta airlines.

"Crude prices don't want to rebound even as we get some signs that supplies might struggle over the short-term," said Moya. "WTI crude is below the $70 level and it doesn't look like it is looking to stabilize anytime soon."

The decline in crude oil prices came amid news that would otherwise be bullish for the market, suggesting economic fears are entrenched. Another vessel was seized by Iran, according to the U.S. military, and Russian President Vladimir Putin claimed drones over the Kremlin were part of an assassination attempt.