When the U.S. Energy Information Administration (EIA) released its report on U.S. crude oil inventories Thursday, the agency noted a 6.4 million barrel week-over-week decline in crude oil and a week-over-week drop of 2.9 million barrels in gasoline stockpiles. Yet the price of crude settled down about 2.5% Thursday and traded down another 1.8% Friday morning.

If inventory levels are dropping, then why aren’t wholesale and retail prices rising? Especially considering that demand for gasoline, as measured by the EIA’s product supplied metric, rose by nearly 150,000 barrels a day last week and total demand for all refined products rose by more than 200,000 barrels a day.

The answer has a few parts. First, refineries are utilizing more of their capacity. Refinery runs rose by 229,000 barrels a day last week, an all-time record, replacing the previous record set in April. Refinery utilization rose to 95%, the highest level of the year so far.

But demand for gasoline and other refined products was up too, so what’s the problem? The issue is whether this rise in demand is just a blip or a trend. Analyst Jenna Delaney at Platts Analytics said:

Looking at the four-week moving average for gasoline and distillate demand, both remain near the highest levels seen over the past 10 years. This strong demand has contributed to inventories for both products averaging near-normal day-forward cover levels, despite the high run rates from refineries over the past couple months.

Strong demand for exports of both U.S. crude and refined products, along with high domestic demand for gasoline, should continue to lower commercial stockpiles and prices should rise both for crude oil producers and retail customers.

Demand, however, is a fickle thing, and there is some risk that with all the U.S. crude and refined products now making their way to the both the global and domestic markets, those markets could become saturated. At the moment, though, that risk is probably pretty well contained. That means refining margins likely will remain high, giving refiners continued incentive to produce at record volumes. Retail prices don’t have to rise in this scenario, so they very likely won’t.

As more wells are completed this year, crude oil production could very well begin to catch up with inventory drawdowns and the United States will find itself entering the winter season with not much less crude oil in inventory than what it started with at the end of last winter. That scenario, too, would maintain downward pressure on prices.

Benchmark West Texas Intermediate (WTI) crude for July delivery traded down about 2.5% shortly before noon Friday at $47.15, after touching a morning low of $46.74.

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