Oil and Gas Demand Is Wavering

October 22, 2020 07:51 AM
EIA reports demand is standing still
U.K. and European cities report fewer cars on the road
Second wave of virus fears are affecting the markets
Energy Report

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The Phil Flynn Energy Report 

Are We Standing Still

Oil is standing still, beneath a darkened sky, gas is standing still, with the scenery flying by. Just standing still out of the corner of my eye, was that car passing me by just standing still.

Crude oil prices took a hit after the Energy Information Administration (EIA) reported gasoline and oil demand seems to be standing still. Do those numbers matter when it is clear that Hurricane Delta heavily impacted the data? We saw significant drops in refinery runs and oil productions, and with the weather being a significant factor, it kept many people at home. Still, there are real concerns about a second wave of the coronavirus.

Demand fears are an issue. Even in a trading range as supplies globally tighten, slowing demand is a concern. Bloomberg reports that “Traffic congestion and actual vehicle counting station data signal fewer cars in the U.K. and continental European cities and inter-urban roads as more local lockdowns are imposed. The recovery to 95% of normal seen in late Aug-early Sep has fallen back now 85-90%. Reuters reports that gasoline supplied to the domestic market has fallen over the last two weeks, interrupting the previous recovery. It was -9% below the five-year seasonal average last week, down from -4% two weeks earlier. 

The EIA says that "U.S. crude oil refinery inputs averaged 13.0 million barrels per day during the week ending October 16, 2020, which was 0.6 million barrels per day less than the previous week’s average. Refineries operated at 72.9% of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 million barrels per day. Distillate fuel production decreased last week, averaging 4.1 million barrels per day. U.S. crude oil imports averaged 5.1 million barrels per day last week, down by 167,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 5.3 million barrels per day, 13.8% less than the same four-week period last year.”

“Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 509,000 barrels per day, and distillate fuel imports averaged 152,000 barrels per day. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels from the previous week. At 488.1 million barrels, U.S. crude oil inventories are about 10% above the five year average for this time of year. Total motor gasoline inventories increased by 1.9 million barrels last week and are about 2% above the five-year standard for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories decreased by 3.8 million barrels last week and are about 19% above the five year average for this time of year. Propane/propylene inventories fell by 1.6 million barrels last week and are about 11% above the five-year average for this time of year. Total commercial petroleum inventories decreased by 7.2 million barrels last week.”

Total products supplied over the last four-week period averaged 18.3 million barrels a day, down by 12.9% from the same period the previous year. Over the past four weeks, motor gasoline product supplied averaged 8.6 million barrels a day, down by 8.7% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, down by 7.0% from the same period the previous year. Jet fuel product supplied was down 45.9% compared with the same four-week period last year.

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About the Author

Phil Flynn is a senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. Phil is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets.