This Week in Petroleum

Release date: July 1, 2020  |  Next release date: July 8, 2020

April data indicate record increase in U.S. crude oil inventories, record decreases in refinery runs and demand

On March 13, 2020, President Trump declared a national emergency in the United States in response to concerns regarding the 2019 novel coronavirus disease (COVID-19 ) outbreak. The U.S. Energy Information Administration's (EIA) June Petroleum Supply Monthly (PSM), which includes the first complete set of key U.S. crude oil data from April 2020 (the first complete month after the declaration of the national emergency), shows the significant behavioral effects of the several measures taken to mitigate the spread of COVID-19 and of the virus itself. The April data include record month-over-month changes in several key areas, including refinery runs, product supplied for motor gasoline and jet fuel, and ending stocks for crude oil.

With a record month-over-month increase of 47 million barrels (10%)—the largest monthly increase in EIA data going back to 1920—U.S. crude oil inventories grew to 529 million barrels in April, the largest month-ending inventory level since March 2017. The rise in inventory began shortly after widespread stay-at-home orders were issued. Inventories increased by 75 million barrels (16%) from the end of February to the end of April. This record change in inventory over a two month period is 38% greater than the next largest two-month change of 54 million barrels, which occurred in January and February 2015, and shows the impact of COVID-19 and related restrictions on crude oil demand (Figure 1).

Figure 1. Two-month change in crude oil inventories

The rapid increase in U.S. crude oil inventories and scarce availability of crude oil storage contributed to negative West Texas Intermediate (WTI) crude oil futures prices at the end of April. 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, rose from 38 million barrels on March 13 to 65 million barrels as of May 1 (83% of Cushing’s working storage capacity after accounting for pipeline fill and stocks in transit), according to EIA's Weekly Petroleum Status Report.

April's record crude oil inventory increase is a result of refinery runs falling more quickly than U.S. crude oil production and imports. U.S. production of crude oil in April averaged 12.1 million barrels per day (b/d), a decrease of 669,000 b/d (5%) from March. This decrease represents the largest month-over-month decline since September 2008, when Hurricanes Ike and Gustav hit the U.S. Gulf Coast. U.S. imports of crude oil fell by 776,000 b/d (12%) from March to April. However, the declines in crude oil production and imports were less than the record 2.4 million b/d (16%) decrease in gross inputs into refineries, driving crude oil inventories up in April (Figure 2).

Figure 2. Gross inputs into U.S. refineries and U.S. crude oil inventory

U.S. refinery runs saw double digit percentage decreases in all Petroleum Administration for Defense Districts (PADD), ranging from a decrease of 14% in the Gulf Coast (PADD 3) to a decrease of 20% on the West Coast (PADD 5). The West Coast and East Coast (PADD 1) experienced their lowest runs on record (EIA data go back to 1965). Lower gross inputs into refineries reflect less demand for transportation fuels in April.

As spread of the virus, stay-at-home orders, and other mitigation efforts took effect and limited travel in the United States, demand for finished petroleum products (as measured by product supplied) fell (Figure 3). From March to April, U.S. product supplied of finished motor gasoline decreased a record 1.9 million b/d (25%) to 5.9 million b/d (national EIA product supplied of finished motor gasoline data go back to 1945). Midwest (PADD 2) and Gulf Coast demand reached record lows since the beginning of EIA regional data in 1981. Compared with April 2019, total U.S. gasoline demand dropped 3.5 million b/d (37%), the biggest year-on-year change on record. As demand for motor gasoline fell, refinery gasoline yield decreased to a record low of 41% in April 2020, down from 45% for both the previous month (March 2020) and the year-ago level (April 2019) (EIA data on refinery yields go back to 1993). The record month-over-month decline in product supplied and decreasing gasoline refinery yield reflect the significant decrease in gasoline consumption during the first complete month of stay-at-home orders.

Figure 3. U.S. demand of gasoline, distillate, and jet fuel

As yields to gasoline production decreased, distillate yields for refineries in the United States increased to a record high of 38%, compared with 32% in March 2020 and 30% in April 2019. From March to April 2020, U.S. product supplied of distillate fuel oil fell by 408,000 b/d (10%), the largest monthly decrease since February 2018. The high level of refinery production and low demand led to a monthly distillate inventory increase of 24 million barrels (19%) in April, the largest month-over-month inventory growth for distillate fuel oil since 1982.

U.S. demand for jet fuel also fell in April as air transportation decreased when COVID-19 concerns became more widespread. U.S. demand for jet fuel decreased to a record low of 691,000 b/d, down 696,000 b/d (50%) from March (EIA data on the product supplied of jet fuel go back to 1965). This month-over-month decrease marks the second consecutive month of a record decline.

Despite decreasing demand, ending U.S. stocks of jet fuel remained relatively unchanged in April. In both March and April, jet fuel ending stocks were 40 million barrels, 3 million barrels (7%) less than in February. Trade press reports indicate that U.S. refineries have been using jet fuel as feedstock to produce more distillate fuel, likely preventing jet fuel stock increases.

U.S. average regular gasoline and diesel prices rise

The U.S. average regular gasoline retail price rose more nearly 5 cents per gallon from the previous week to $2.17 per gallon on June 29, 54 cents lower than the same time last year. The Gulf Coast price rose nearly 6 cents to $1.87 per gallon, the Midwest price brose more than 5 cents to $2.11 per gallon, the Rocky Mountain price rose more than 4 cents to $2.32 per gallon, the East Coast price rose nearly 4 cents to $2.09 per gallon, and the West Coast price rose more than 3 cents to $2.75 per gallon.

The U.S. average diesel fuel price rose nearly 1 cent from the previous week, remaining virtually unchanged at $2.43 per gallon on June 29, 61 cents lower than a year ago. The Midwest price rose 1 cent to $2.30 per gallon, the East Coast price rose nearly 1 cent, remaining virtually unchanged at $2.52 per gallon, and the West Coast price rose less than 1 cent, remaining virtually unchanged at $2.95 per gallon. The Rocky Mountain price fell 1 cent to $2.34 per gallon, and the Gulf Coast price fell less than 1 cent to $2.19 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 3.3 million barrels last week to 74.6 million barrels as of June 26, 2020, 4.9 million barrels (7.0%) greater than the five-year (2015-19) average inventory levels for this same time of year. Midwest, Gulf Coast, East Coast, and Rocky Mountain/West Coast increased by 1.4 million barrels, 0.8 million barrels, 0.6 million barrels, and 0.4 million barrels, respectively.

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Retail prices (dollars per gallon)

Conventional Regular Gasoline Prices Graph. On-Highway Diesel Fuel Prices Graph.
  Retail prices Change from last
  06/29/20 Week Year
Gasoline 2.174 0.045 -0.539
Diesel 2.430 0.005 -0.612

Futures prices (dollars per gallon*)

Crude Oil Futures Price Graph. RBOB Regular Gasoline Futures Price Graph. Heating Oil Futures Price Graph.
  Futures prices Change from last
  06/26/20 Week Year
Crude oil 38.49 -1.26 -19.98
Gasoline 1.153 -0.119 -0.790
Heating oil 1.136 -0.075 -0.809
*Note: Crude oil price in dollars per barrel.

Stocks (million barrels)

U.S. Crude Oil Stocks Graph. U.S. Distillate Stocks Graph. U.S. Gasoline Stocks Graph. U.S. Propane Stocks Graph.
  Stocks Change from last
  06/26/20 Week Year
Crude oil 533.5 -7.2 65.0
Gasoline 256.5 1.2 25.9
Distillate 174.1 -0.6 47.3
Propane 74.599 3.268 2.286