Motorist Traffic Fell 19% in March
May 13th, 2020
The inventory report from the API said that crude stocks were up 7.6 million barrels and that the crude stocks at Cushing, Ok were down 2.3 million barrels. Gasoline stocks were called down 1.9 million barrels and distillate stocks were up 4.7 million barrels. Estimates from Reuters for today’s DOE inventory update are for crude to be up 4.1 million barrels, gasoline stocks down 2.2 million and distillates up 2.9 million barrels.
The EIA in their Short Term Energy Outlook said that US oil demand is expected to fall by 2.2 million bpd as the coronavirus pandemic restricts movement across the world and cuts fuel demand. It expects gasoline demand to fall to an average of 7 million bpd in the second quarter from 8.6 million bpd in the first quarter and gradually increase to 8.7 million bpd in the second half of the year. US distillates demand is forecast to fall by 600,000 in the first quarter to 3.3 million bpd in the second quarter. US crude oil output is forecast to average 11.7 million bpd in 2020, down 500,000 bpd on the year and in 2021. Oil production is expected to fall further, declining about 790,000 bpd to 10.9 million bpd compared with a previous forecast of a decline of 730,000 bpd. The EIA expects world oil demand in 2020 to fall by 8.1 million bpd to 92.6 million bpd, compared with a previous forecast for a fall of 5.2 million bpd.
US Transportation Department said travel by US motorist fell nearly 19% in March from the same month last year as the coronavirus pandemic prompted millions of American to work from home. In total, travel on US roads fell in March by 50.6 billion miles over March 2019 to 221 billion vehicles miles.
OPEC+ said that they are wanting to maintain the existing oil cuts beyond the June deadline. OPEC and its allies agreed in April to cut output by 9.7 million bpd for May and June.
Platts Analytics estimates that Cushing storage levels have reached 86% of working capacity, with only around 4.5 million barrels of open storage left unfilled for the week ending May 1st. Platts is estimating Permian Basin production could drop to below 3.5 million bpd in May and June after reaching a peak of 4.9 million in February of this year. But Platts is estimating output could rebound in the third quarter. Overall, the company is estimating that US producers have shut in some 1.7 million bpd of crude production.
Saudi Aramco reported a 25% fall in first-quarter net profit, while its quarterly dividend was in line with a plan for a $75 billion base payout to shareholders for the year. Net profit fell to 62.48 billion riyals ($16.64 billion) after zakat and tax for the quarter to March 31 from 83.29 billion a year earlier.
The market is going to battle for the next several months between the bearish news on the demand side of the equation and the bullish news on the supply side. Even though the market is currently getting some positive news on the demand side as states end lockdowns, there are still millions not driving to work. There will also be the concerns of a second wave that will impact demand. On the bullish supply side there is all the reports of production shutdowns and cuts.