Gas and Distillate Demand Significantly Below 10-Year Trends
August 20, 2020
The US Energy Information Administration said US crude oil stockpiles fell last week even as net imports increased sharply, while fuel demand fell as well. Crude inventories fell by 1.6 million barrels in the week to August 14th to 512.5 million barrels. Net US crude imports increased by 1.1 million bpd to 3.6 million bpd. Fuel demand fell by more than 2 million bpd to 17.2 million bpd in terms of product supplied. Overall fuels demand is down 14% from the yea-ago period over the last four weeks. Refinery crude runs fell by 171,000 bpd in the last week, EIA said, while refinery utilization rates fell by 0.1%. US gasoline stocks fell by 3.3 million barrels to 243.8 million barrels, while distillate stocks increased by 152,000 barrels. EIA reported that total gasoline and distillate implied demand fell significantly back below the 10-year minimums for this time of year.
St. Louis Federal Reserve Bank President, James Bullard, said a stock market hitting record highs in a pandemic might seem out of touch, but added that Wall Street has got it right and he expects the United States to do better than many forecasters anticipate as businesses and household learn to manage coronavirus risks. He sees the US economy shrinking 4% for the year, substantially more optimistic than the 6.5% median projection his colleagues made in June, and also less dire than the median forecast of economist polled by Reuters in mid-July.
Propane inventories had a surprise draw in yesterday’s update with inventory down by 41,000 barrels with total stocks at 89.295 million barrels. Midwest inventories were up 443,000 barrels to 24.812 million barrels. The Gulf Coast inventories were down 256,000 to 52.250 million barrels. Exports were up by 259,000 to 1.172 million barrels and this looks to be the biggest contributor to the stock decline. Production was down by 119,000 barrels to 2.204 million barrels. The market is trying to figure out if this is a trend or just a one off. Will exports continue strong and eat into the glut of stocks on the Gulf Coast? Propane price did firm up after the report, but it was a pretty calm trading day.
EIA reported that total gasoline and distillate implied demand fell significantly back below the 10-year minimums for this time of year and that has raised some demand concerns.
OPEC and its allies left oil cut levels unchanged as the Joint Ministerial Monitoring Committee meet to give their recommendation yesterday. They urged those that have overproduced in May through July to do their part to cut more to make up for the past overproduction in August and September. Those are mainly Iraq, Nigeria, Angola, and Kazakhstan. OPEC+ said that the oil demand recovery has slow but are looking for it to recover to pre-pandemic levels but the end of year.
The Federal Reserve released the minutes from its last meeting yesterday. The minutes showed a Fed worried about how to keep the economy going should the number of coronavirus cases continue to climb. This put a bit of selling pressure late in the day on equities.