Release date: April 29, 2020 | Next release date: May 6, 2020
Record low demand and low crack spreads drive refinery run declines
Transportation fuel demand in the United States has decreased since mid-March 2020, as a result of reduced economic activity and stay-at-home orders aimed at slowing the spread of the 2019 novel coronavirus disease (COVID-19). With low demand and a decrease in profitability, as measured by crack spreads, U.S. refineries have reduced gross inputs (runs), which dropped to 12.8 million barrels per day (b/d) for the week ending April 17, 3.8 million b/d lower than the previous five-year (2015–19) average and the lowest level since 2008 (Figure 1). Gross inputs increased slightly to 13.2 million b/d the week of April 24.
From March 13 (when a national emergency was declared in the United States) to April 24, finished motor gasoline consumption (measured as product supplied) fell by 3.8 million b/d (40%) to 5.9 million b/d, the fourth-lowest level of product supplied recorded since the U.S. Energy Information Administration (EIA) began tracking these data in 1991 (Figure 2). The only weeks on record lower than the week of April 24 occurred in the previous three weeks, with the record low of 5.1 million b/d set the week of April 3. The rolling four-week average likewise fell rapidly, falling 4.0 million b/d (43%) to 5.3 million b/d for the week ending April 24. Jet fuel product supplied set a record low during the week of April 10, falling 1.3 million b/d (73%) to 463,000 b/d from March 13 levels. Jet fuel product supplied increased during the past two weeks, averaging 800,000 b/d for the week ending April 24; however, the four-week average continued to decline, falling 133,000 b/d (17%) from April 17 levels to 658,000 b/d for the week of April 24.
Stay-at-home orders and travel restrictions have affected finished motor gasoline and jet fuel demand more than distillate fuel. From March 13 to April 3, distillate fuel product supplied remained within the five-year range. Since April 3, however, distillate product supplied has also fallen, reaching a recent low of 2.8 million b/d for the week of April 10. Since then, distillate fuel product supplied has increased slightly, averaging 3.2 million b/d the week ending April 24. Because diesel fuel is used extensively in trucking, increased demand for home delivery and distribution of necessary goods and services has likely supported the distillate product supplied. Recent declines in broad economic activity may be reducing overall distillate demand, despite some support from trucking activity.
The relative strength of distillate fuel demand helped the 3-2-1 crack spread (the difference between the product price and the price of crude oil based on 3 barrels of crude oil yielding approximately 2 barrels of gasoline and 1 barrel of distillate fuel) remain positive despite gasoline crack spreads dipping into negative territory (Figure 3). On March 23, 2020, U.S. Gulf Coast gasoline crack spreads (using front-month futures for U.S. Gulf Coast 87 gasoline and West Texas Intermediate crude oil) fell to -$0.18 per gallon (gal) and the 3-2-1 crack spread fell to $0.03/gal, the lowest levels for both the gasoline and 3-2-1 crack spreads since December 2014. Since March 23, gasoline crack spreads have begun to increase while diesel crack spreads have started to decrease.
Responding to the decrease in demand for gasoline and low crack spreads, U.S. refineries reduced production of gasoline, based on estimates from EIA’s Weekly Petroleum Status Report (WPSR). U.S. refiner production of motor gasoline fell from 7.9 million b/d for the week ending March 13 to 5.4 million b/d for the week ending April 24. Production of jet fuel also decreased, falling from 1.6 million b/d to 602,000 b/d during the same period. Production of distillate, on the other hand, increased 296,000 b/d (6%) for this same time period. This increase resulted in a 39% distillate yield (distillate production divided by crude inputs) for the week ending April 24, the second highest percentage yield of distillate since at least 1990 when data on refinery inputs started being collected by EIA. The only week on record higher than the week ending April 24 is the week prior, with a distillate yield of 40%. In 2019, U.S. refineries produced 67% more motor gasoline than distillate, but as of April 24 refiners were producing only 10% more gasoline than distillate. Yield calculations are approximate based on data available from the WPSR. Yield calculations based on complete data from EIA’s Petroleum Supply Monthly are described in Explanatory Notes.
Since March 13, low refinery runs have contributed to record increases in U.S. commercial crude oil inventories. From March 13 to April 24, U.S. crude oil inventories saw a 16% increase, up by 73.9 million barrels. U.S. crude oil inventories are now higher than the previous five-year average for this time of year, but are still within the five-year range. The U.S. Gulf Coast (Petroleum Administration for Defense District, or PADD, 3) typically has the most crude oil inventories. From March 13 to April 24, Gulf Coast inventories increased by 36.4 million barrels to 280.4 million barrels, 6.0 million barrels more than the five-year maximum for this time of year. Inventories in the crude oil storage hub in Cushing, Oklahoma, in PADD 2 (Midwest) increased by 24.9 million barrels during the same period and were 8.3 million barrels higher than the five-year average.
To help stakeholders better assess crude oil storage and capacity, EIA began providing weekly estimates of U.S. crude oil storage capacity utilization (how much crude oil is currently held) beginning with the WPSR release on Wednesday, April 8, 2020, with data for week ending April 3, 2020. This information will be provided for an indeterminate period of time. The data in the April 29 release of this information indicate that U.S. crude oil storage is at 61% of working capacity, up from 60% the prior week. Storage utilization in the Gulf Coast and Midwest is at 60% and 65%, respectively (Figure 5). Utilization in Cushing, OK (in the Midwest region) is at 81%. Utilization estimates are based on the most recent weekly inventory data (excluding pipeline fill and water-borne volumes) and the most recent Working and Net Available Shell Storage Capacity Report, which was released in November 2019 with data through September 2019. The next release will be on May 29, 2020, with data through March 2020.
U.S. average regular gasoline and diesel prices fall
The U.S. average regular gasoline retail price nearly 4 cents per gallon from the previous week to $1.77 per gallon on April 27, $1.11 per gallon lower than the same time last year. The West Coast price fell more than 6 cents to $2.45 per gallon, the Rocky Mountain price fell nearly 6 cents to $1.81 per gallon, the Gulf Coast price fell nearly 4 cents to $1.51 per gallon, and both the East Coast price and the Midwest price fell more than 3 cents to $1.81 per gallon and $1.48 per gallon, respectively.
The U.S. average diesel fuel price fell more than 4 cents to $2.44 per gallon on April 20, 73 cents lower than a year ago. The Gulf Coast price fell more than 6 cents to $2.21 per gallon, the West Coast price fell 4 cents to $2.93 per gallon, both the Midwest price and the Rocky Mountain price fell nearly 4 cents to $2.29 per gallon and $2.47 per gallon, respectively, and the East Coast price declined by more than 3 cents to $2.55 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 0.6 million barrels last week to 56.8 million barrels as of April 24, 2020, 6.7 million barrels (13.3%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast and Rocky Mountain/West Coast inventories decreased by 1.1 million barrels and 0.1 million barrels, respectively. Midwest and East Coast inventories increased by 0.3 million barrels and 0.2 million barrels, respectively. Beginning with the data for week ending April 10, 2020, U.S. and regional stocks of propylene reported by EIA include only barrels of propylene held at refineries; barrels of propylene held at bulk terminals are excluded. For more information please refer to the notice on the Weekly Petroleum Status Report main page.
For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.
Retail prices (dollars per gallon)
| Retail prices | Change from last | ||
|---|---|---|---|
| 04/27/20 | Week | Year | |
| Gasoline | 1.773 | -0.039 | -1.114 |
| Diesel | 2.437 | -0.043 | -0.732 |
Futures prices (dollars per gallon*)
| Futures prices | Change from last | ||
|---|---|---|---|
| 04/24/20 | Week | Year | |
| Crude oil | 16.94 | -1.33 | -46.36 |
| Gasoline | 0.661 | -0.050 | -1.440 |
| Heating oil | 0.647 | -0.309 | -1.404 |
| *Note: Crude oil price in dollars per barrel. | |||
Stocks (million barrels)
| Stocks | Change from last | ||
|---|---|---|---|
| 04/24/20 | Week | Year | |
| Crude oil | 527.6 | 9.0 | 57.1 |
| Gasoline | 259.6 | -3.7 | 32.8 |
| Distillate | 142.0 | 5.1 | 16.2 |
| Propane | 56.835 | -0.606 | 3.564 |