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Petroleum & Other Liquids

This Week in Petroleum

Release date: August 5, 2020  |  Next release date: August 12, 2020

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As lockdowns ease, May gasoline demand increases and crude oil production slows

The U.S. Energy Information Administration’s (EIA) data show that demand (tracked by EIA as product supplied) for gasoline increased month-over-month in May as many states began to relax stay-at-home orders, while demand for jet fuel continued to decline to historic lows because of reduced commercial air travel. The May data also show a decline in crude oil inventories—because of a narrow uptick in crude oil runs (or crude oil inputs to refineries)—and a large decline in crude oil production. EIA’s July Petroleum Supply Monthly (PSM), which includes the complete set of key U.S. petroleum data from May 2020, shows how crude oil and petroleum product markets continue to be affected by the changing measures taken to mitigate the spread of the 2019 novel coronavirus disease (COVID-19).

Several states began easing stay-at-home and social distancing orders in May, leading to an increase in gasoline demand (Figure 1). From April to May, U.S. product supplied of finished motor gasoline increased by 1.3 million barrels per day (b/d) (23%) to 7.2 million b/d, a record increase, although the increase follows April’s record reduction of 1.9 million b/d. May 2020 gasoline demand was 2.2 million b/d (24%) lower than May 2019 levels.

Figure 1. U.S. product supplied of gasoline, didtillate, and jet fuel

May also saw a shift in gasoline trade patterns. U.S. gross exports of gasoline fell to 340,000 b/d in May, a decrease of 506,000 b/d from the month before and the lowest U.S. monthly gasoline export total since 2010. The reduction in total U.S. gasoline exports is primarily a result of falling exports to Mexico, historically the largest recipient of U.S. gasoline exports, because the COVID-19 outbreak has also affected fuels demand in that country. Although U.S. domestic demand increased in May, reduced exports contributed to May gasoline inventories rising by 898,000 barrels (less than 1%) to 258.2 million barrels.

Although distillate demand in May also increased, the change was smaller than for gasoline on a percentage basis. Distillate product supplied increased by 28,000 b/d, or nearly 1%, compared with the 408,000 b/d (10%) reduction in April. May distillate demand is down 13% from May 2019, widening the year-on-year decrease from April, when demand was down 12%. Distillate demand is more insulated from individual consumer preference, but other economic impacts associated with the outbreak reduced demand for on-road trucking of goods and materials, the primary driver of distillate demand.

Unlike gasoline and distillate, jet fuel demand in May decreased by 95,000 b/d (14%) compared with April to average 596,000 b/d, the lowest jet fuel demand in the United States since 1968 and a decrease of 1.2 million b/d (67%) from May 2019. The 95,000 b/d decrease in demand from April to May is much smaller than the 696,000 b/d (50%) decrease from March to April, but it marks the third consecutive month in which jet fuel demand reached historic lows. The decrease from May 2019 to May 2020 was the largest year-on-year reduction for any month on record, on both a volumetric and percentage basis (EIA data on the product supplied of jet fuel date back to 1965).

Increasing domestic gasoline demand—especially relative to smaller increases in distillate demand and decreases in jet fuel demand—encouraged refiners to shift yields back toward gasoline, partially reversing the upward trend in distillate yields that the U.S. refining system experienced in April (Figure 2). May average gasoline yield was 44.6%, a month-on-month increase of 3.9%. At 35.6%, distillate yield remains relatively high (5.6% higher than May 2019), indicating the continued processing of jet fuel into the distillate pool. Jet fuel yield, conversely, has continued to decrease to previously unseen levels as refiners continue to prioritize gasoline and distillate production, likely because of comparatively low jet fuel demand. The average jet fuel yield reached 3.8% in May, a decline of 6.2% from May 2019.

Figure 2. U.S. refinery yield of gasoline, distillate, and jet fuel

After April’s rapid increase in crude oil inventories—and the accompanying price premium on storage space that their increase created—May crude oil inventories decreased by 8.2 million barrels (2%) to 521.0 million barrels, but they remained about 40.8 million barrels (9%) higher than May 2019 levels. The decrease in inventories is partially driven by the increase in refinery runs, but the largest movement in the crude oil balance came from crude oil production in the Lower 48 states, which decreased by 2.1 million b/d (17%) in May to about 10.0 million b/d, the largest monthly volumetric decrease in crude oil production on record. The decline in production is discussed in detail in the August 4, 2020, edition of Today in Energy.

韩国三级电影Lower crude oil inventories in May reduced tightness in the storage market and contributed to rising West Texas Intermediate (WTI) crude oil futures prices during the month. Crude oil inventories in Cushing, Oklahoma, where market participants that hold expiring WTI futures positions must make or take physical delivery of WTI crude oil, were 52.4 million barrels at the end of May, down 13.1 million barrels (20%) from the end of April.

U.S. average regular gasoline prices increase, diesel prices fall

The U.S. average regular gasoline retail price rose less than 1 cent per gallon from the previous week to remain virtually unchanged at $2.18 per gallon on August 3, 51 cents lower than the same time last year. The Rocky Mountain price increased nearly 5 cents to $2.37 per gallon, the East Coast price rose more than 1 cent to $2.11 per gallon, and the West Coast price rose nearly 1 cent to $2.83 per gallon. The Midwest price fell 2 cents to $2.06 per gallon, and the Gulf Coast price fell nearly 1 cent to $1.85 per gallon.

The U.S. average diesel fuel price fell less than 1 cent from the previous week to $2.42 per gallon on August 3, 61 cents lower than a year ago. The Gulf Coast price fell nearly 1 cent, remaining virtually unchanged at $2.18 per gallon, and the East Coast and Midwest prices each fell less than 1 cent, remaining virtually unchanged at $2.52 per gallon and $2.30 per gallon, respectively. The West Coast price rose less than 1 cent to $2.96 per gallon, and the Rocky Mountain price rose less than 1 cent, remaining virtually unchanged at $2.34 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 2.3 million barrels last week to 86.7 million barrels as of July 31, 2020, 10.2 million barrels (13.4%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast and Midwest inventories increased 1.6 million barrels and 1.1 million barrels, respectively. East Coast inventories decreased 0.3 million barrels, and Rocky Mountain/West Coast inventories decreased slightly, remaining virtually unchanged.

For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.

Tags: distillate fuel , exports/imports , gasoline , jet fuel , liquid fuels , oil/petroleum , petroleum products , production/supply韩国三级电影

Retail prices (dollars per gallon)

Retail price graphs
  Retail prices Change from last
  08/03/20 Week Year
Gasoline 2.176 0.001 -0.512
Diesel 2.424 -0.003 -0.608

Futures prices (dollars per gallon*)

Futures price graphs
  Futures prices Change from last
  07/31/20 Week Year
Crude oil 40.27 -1.02 -15.39
Gasoline 1.187 -0.098 -0.595
Heating oil 1.217 -0.039 -0.673
*Note: Crude oil price in dollars per barrel.

Stocks (million barrels)

Stock price graphs
  Stocks Change from last
  07/31/20 Week Year
Crude oil 518.6 -7.4 79.7
Gasoline 247.8 0.4 12.6
Distillate 180.0 1.6 42.5
Propane 86.713 2.309 7.452