Rystad Energy: US crude oil stock builds break records

Stocks are building as a result of low oil demand. The Covid-19 pandemic and high global production have created one of the largest supply-demand imbalances in history. Consequently, refinery runs in the US are also in free fall to adjust to the market needs. Rystad Energy forecasts refinery intake to fall by 23.2% in April y/y, to 12.6 million bpd from 16.4 million bpd a year ago.

In fact, as more and more barrels will increasingly find their way into the storage system over the coming weeks, refinery crude intake could fall to as low as 12 million bpd by late April, according to our estimates.

The US Gulf Coast accounts for 1.5 million bpd of the monthly reduction and the West Coast for nearly 900 000 bpd. Midwest refiners are also expected to be hit hard given the landlocked geography and lack of direct access to the export market.

“With several states across the US mandating non-essential workers stay at home to restrain the spread of the coronavirus outbreak, we estimate that US gasoline demand is set to decline by an unprecedented 4.2 million bpd y/y in April 2020. The astonishing collapse in gasoline demand will likely push refiners to deepen run cuts and in some cases trigger shut-downs altogether,” said Paola Rodriguez-Masiu, Rystad Energy Senior Oil Markets analyst.

Currently standing at 484.4 million bbl, commercial crude stockpiles are more than 2% above the five-year average for this time this year, and just 51.1 million bbl away from hitting the record level of 535.5 million bbl reached during the spring of 2017. The bulk of the most recent weekly build was in the Midwest (PADD II), where inventories increased by 7.4 million bbl, the largest ever on record, to 141.8 million bbl.

With the latest build, storage tanks in PADD II are at nearly 57% of working capacity. US Gulf Coast (PADD III) crude inventories jumped 5.3 million barrels to 253.1 million bbl as exports fell to their lowest since November 2019. Commercial storage crude tanks in PADD III are now at 52% of working capacity.

Despite the colossal drop in refinery runs and product output, nationwide total motor gasoline inventories ticked up 10.5 million bbl to 257.3 million bbl, putting gasoline storage at about 10% above the five-year average.

“With the latest build, total motor gasoline stocks are just 104 million bbl away from reaching the maximum workable storage capacity. If gasoline storage continues to build at the current pace, the US will run out of places to store finished gasoline and blending components in about 69 days,“ Rodriguez-Masiu concluded.

Read the article online at: https://www.oilfieldtechnology.com/special-reports/16042020/rystad-energy-us-crude-oil-stock-builds-break-records/