The oil glut that many said would never go away is officially gone. For the first time since June of 2015 oil supplies are back in the average range and not above average. This is happening as U.S demand is above average and that in part explains why the supply of oil continues to drain at the fastest pace in history.

The Energy Information Administration reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 4.9 million barrels from the previous week. That puts supply at 419.5 million barrels down from March 2017 when supply was at 528.7 mb in storage. That is a massive drop in supply as U.S demand soars, U.S imports have fallen and U.S crude exports are at records.

We did see an increase in products but that was pale in comparison to recent demand. The EIA reported that total motor gasoline inventories increased by 4.1 million barrels last week and are near the top of the average range. Finished gasoline inventories were down slightly.

Yet, the demand was the story that has not been told enough. Over the last four weeks, motor gasoline product supplied averaged about 9.1 million barrels per day, up by an impressive 2.5% from the same period last year.

Distillate fuel inventories increased by 4.3 million barrels last week and are in the middle of the average range for this time of year. Distillate fuel product supplied averaged about 3.9 million barrels per day over the last four weeks! That is a big increase year over year.

It’s not just U.S. demand. This demand surge is a global phenomenon. While India’s oil demand may have disappointed by its 2017 demand growth, which was the slowest pace in four years, it was due to a fuel tax the government imposed to slow growth to a modest 2.3 per cent. India imported around 4.2 million barrels per day (bpd) of crude in 2017, according to trade flow data in Thomson Reuters Eikon. Their gas demand increased by 7.4% down from 12% the year before. Still impressive in a normal world.