Demand Crash Led To Biggest Monthly Surge in US Oil Inventories Since 1920

By Tsvetana Paraskova

The oil demand crash in April, when most of America was under stay-at-home orders, resulted in the biggest monthly inventory jump in U.S. commercial crude oil inventories in data going back to 1920, the U.S. Energy Information Administration (EIA) said on Thursday.

In April, U.S. commercial crude stocks soared by 46.7 million barrels, or by 10 percent, as demand for refined petroleum products slumped to the lowest level in nearly 40 years, according to EIA estimates.

Refinery utilization rate was at 70 percent in April—the lowest utilization rate in monthly data dating back to 1985.

Demand for finished petroleum products crashed to 11.7 million barrels per day (bpd) – the lowest level since at least 1981, the EIA said.

U.S. crude oil production averaged 12.1 million bpd in April, down by 669,000 bpd, or 5 percent, from March.

Demand for oil in the United States continued to be weak after April, too, leading to a record-high level of U.S. commercial crude oil inventories by the middle of June.

The United States held a record-high level of commercial crude oil stocks as of the week to June 19 following the collapse in demand in the lockdown and the slow demand recovery after lockdowns were lifted, the EIA said at the end of last month. At nearly 541 million barrels of crude oil inventories for the week to June 19, the U.S. beat by 5 million barrels its previous record for the highest volume of commercial inventories from late March 2017, EIA data showed.

In the latest reporting week, the EIA said that crude oil inventories in the United States swelled by 5.7 million barrels in the week to July 3, but gasoline inventories drew down. At 539.2 million barrels at the end of last week, U.S. crude oil inventories were about 18 percent above the five-year average for this time of year. Gasoline inventories, however, shrunk by a sizable 4.8 million barrels last week, after a weekly build of 1.2 million barrels for the week to June 26, suggesting that demand for gasoline is continuing to recover, although inventories are still above the five-year average.

By Tsvetana Paraskova for Oilprice.com