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U.S. crude stockpiles rise, fuel demand drops as virus effects start to hit-EIA

Wednesday, 25 March 2020 | 20:00

U.S. crude oil stockpiles rose while gasoline and distillate inventories fell last week, but one-week demand for fuels showed its biggest drop since December, the Energy Information Administration said on Wednesday, in the first inklings of the effect the growing coronavirus pandemic is having on the country’s energy demand.

The coronavirus has sickened nearly 400,000 people worldwide, destroyed gasoline demand as people stay at home, and brought air travel to a virtual halt worldwide. In coming weeks, fuel demand is anticipated to fall sharply, but so far the official U.S. government figures do not show that.

Inventory figures do not show much of an effect from the outbreak or the Saudi Arabia-Russia price war, but the report’s measures on demand are starting to pick up the effect of weaker demand.

The EIA’s measure of products supplied, a proxy for U.S. demand, showed a 2.1 million barrel-per-day in the most recent week to 19.4 million bpd.

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.

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, however, have been running down their stocks of gasoline and diesel fuel to their lowest since December, in anticipation of coming weeks of slack demand.

U.S. 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 a 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 weeks 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.

Crude prices were lower, but edged off the day’s lows. U.S. crude futures were down 65 cents, or 2.7%, to $23.36 a barrel by 10:45 a.m. ET (1445 GMT), while Brent fell 72 cents to $26.42 a barrel.
Source: Reuters (Reporting By David Gaffen Editing by Marguerita Choy)

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