US Petroleum Inventories Fall Sharply Amid Winter Storm

US petroleum inventories fell sharply last week as a severe cold snap disrupted refinery production and spiked heating demand, the EIA reports.

The US Energy Information Administration (EIA) reported a significant drawdown in US petroleum inventories for the week ending January, 2026. The decline is directly attributed to a major Arctic cold snap that has disrupted refinery operations, frozen production wells, and spiked heating demand across the Midwest and Northeast, tightening domestic oil and gas supplies.

The EIA's Weekly Petroleum Status Report showed a larger-than-expected decrease of 12.5 million barrels in total commercial crude oil and product stocks. Distillate fuel inventories, which include heating oil, fell by 4.3 million barrels, highlighting the surge in demand for heating. Refinery utilization rates dropped by 5 percentage points as extreme temperatures caused operational slowdowns and mechanical issues at key facilities along the Gulf Coast.

"The magnitude of this draw reflects the dual impact of the storm: constrained production and a sharp, weather-driven spike in consumption," said a senior EIA analyst. An industry spokesperson from the American Petroleum Institute added, "Our members are working around the clock to restore operations safely, but these conditions show how vulnerable infrastructure is to extreme weather, impacting national fuel supply."

This inventory decline follows a period of relative stability and comes amid ongoing geopolitical tensions affecting global oil flows. The drawdown matters because it puts upward pressure on domestic fuel prices at a peak demand period and tests the resilience of the US energy supply chain. It also influences global benchmark prices, as the US is a major supplier and consumer.

The EIA noted that inventory levels are expected to remain volatile as the winter weather pattern persists. Further weekly data will be crucial for markets to gauge the lasting impact on US energy markets and prices as the industry works to recover from the severe weather disruption.