Washington: US crude oil stockpiles rose last week, but one-week demand for fuels showed its biggest drop since December in the first inkling that the coronavirus pandemic is denting the country's energy demand.
The coronavirus has sickened nearly 400,000 people worldwide, destroyed gasoline demand as people stay home, and has brought air travel to a virtual halt globally. In coming weeks, fuel demand is expected to fall sharply, and the report's measures on demand showed a notable drop in products supplied, the US Energy Information Administration said.
The EIA's measure of products supplied, a proxy for US demand, showed a 2.1 million barrel-per-day fall in the most recent week to 19.4 million BPD. "Gas demand is down a bit so it might be showing up there. Distillate demand is also down a slight bit. In the coming weeks we will see how the lock-ins will affect demand," said Gene McGillian, vice president of market research at Tradition Energy.
Motor gasoline product dropped by 859,000 bpd, even though that figure still shows a 1.2% increase for the four-week average from a year ago. Jet fuel demand fell to 1.47 million bpd, an 18% decline for the week, and a figure that will surely grow worse with most flights grounded worldwide. Distillate product supplied was off by 5% on the week.
Inventory figures do not show much of an effect from the outbreak or the Saudi Arabia-Russia price war yet.
Crude inventories rose by 1.6 million barrels in the week ended March 20 to 455.4 million barrels, compared with analysts' expectations in a Reuters poll for a 2.8 million-barrel rise. Inventories, which have risen for nine straight weeks, are expected to keep rising in coming weeks as fuel demand declines and refineries pare back activity.
For this most recent week, however, refineries continued to run at relatively strong rates for the season. Refinery utilization rates rose by 0.9 percentage points to 87.3% of their available capacity.
Refiners have been running down gasoline and diesel fuel stocks to their lowest since December, in anticipation of weeks of slack demand. US gasoline stocks fell by 1.5 million barrels last week to 239.3 million barrels, the EIA said, compared with analysts' expectations for a 657,000-barrel drop.
"We saw a much larger draw on gas than the poll would have indicated. I was thinking we would see larger product builds on the gasoline side, just because it seems anecdotally that demand is falling and perhaps it will be more reflective in next week's report," said Ryan Kaup, a commodities broker at CHS Hedging.
Distillate stockpiles, which include diesel and heating oil, fell by 679,000 barrels in the week to 124.4 million barrels, versus expectations for a 1.9 million-barrel drop. US crude futures were down 14 cents to $23.88 a barrel by 11:25 a.m. ET (1525 GMT), while Brent fell 3 cents to $27.12 a barrel.
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