Monthly Archives

January 1970

Crude oil tanker rates likely to remain low until petroleum demand increases (10/21/2020)

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In March and April 2020, the reduced demand for crude oil and petroleum products because of responses to COVID-19 led to a sharp increase in global crude oil inventories. As onshore inventories increased, market participants turned to using oil tankers to store oil, which is typically more expensive than onshore storage. The drop in global oil demand and increased need for floating storage occurred at a time when global crude oil production (specifically from members of the Organization of the Petroleum Exporting Countries, or OPEC) and demand for crude oil tankers was high, driving up tanker rates. Tanker rates have declined significantly since peaking in March because crude oil production and demand are now more balanced. However, oil inventories in floating storage remain relatively high. …In March and April 2020, the reduced demand for crude oil and petroleum products because of responses to COVID-19 led to a sharp increase in global crude oil inventories. As onshore inventories increased, market participants turned to using oil tankers to store oil, which is typically more expensive than onshore storage. The drop in global oil demand and increased need for floating storage occurred at a time when global crude oil production (specifically from members of the Organization of the Petroleum Exporting Countries, or OPEC) and demand for crude oil tankers was high, driving up tanker rates. Tanker rates have declined significantly since peaking in March because crude oil production and demand are now more balanced. However, oil inventories in floating storage remain relatively high. …EIA: This Week in Petroleum

EIA expects current, record-high U.S. distillate inventories to fall gradually through the winter heating season (10/15/2020)

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U.S. distillate fuel oil inventories remained high through summer 2020 as a result of production outpacing demand, which continues to be affected by responses to the 2019 novel coronavirus disease (COVID-19). Although about two-thirds of distillate in the United States is consumed for on-highway use each year, demand typically increases during the fall harvest (October-November) in the agriculture sector and during the winter heating season (October–March) in the residential sector. The U.S. Energy Information Administration (EIA) expects that increased demand in these sectors will help to draw down high U.S. distillate inventories, but inventories are still likely to remain higher than the five-year (2015–19) average throughout most of the upcoming winter season. EIA forecasts that high inventories and lower crude oil prices will continue putting downward pressure on diesel prices through the 2020–21 winter season. …U.S. distillate fuel oil inventories remained high through summer 2020 as a result of production outpacing demand, which continues to be affected by responses to the 2019 novel coronavirus disease (COVID-19). Although about two-thirds of distillate in the United States is consumed for on-highway use each year, demand typically increases during the fall harvest (October-November) in the agriculture sector and during the winter heating season (October–March) in the residential sector. The U.S. Energy Information Administration (EIA) expects that increased demand in these sectors will help to draw down high U.S. distillate inventories, but inventories are still likely to remain higher than the five-year (2015–19) average throughout most of the upcoming winter season. EIA forecasts that high inventories and lower crude oil prices will continue putting downward pressure on diesel prices through the 2020–21 winter season. …EIA: This Week in Petroleum

Global crack spreads remain low amid slow oil demand recovery and high stocks (10/7/2020)

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In its latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) estimates that third-quarter 2020 global liquid fuels consumption averaged 94.2 million barrels per day (b/d), an increase from the second quarter but significantly lower than the same time last year. The slow recovery has contributed to low gasoline and diesel crack spreads and high petroleum product stocks in three major petroleum product trading and refining centers-the U.S. Gulf Coast, the Amsterdam-Rotterdam-Antwerp (ARA) region, and Singapore. Between April and September, the five-day moving average crack spread for each product in all regions, except for U.S. Gulf Coast gasoline, declined to their lowest levels since at least 2011 (Figure 1). September crack spreads remained significantly lower than their previous five-year (2015-19) averages. EIA has reduced its forecast for 2021 global consumption of petroleum and other liquids as a result of lowered expectations for economic growth in both 2020 and 2021, leading to a balanced global inventory outlook in 2021. …In its latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) estimates that third-quarter 2020 global liquid fuels consumption averaged 94.2 million barrels per day (b/d), an increase from the second quarter but significantly lower than the same time last year. The slow recovery has contributed to low gasoline and diesel crack spreads and high petroleum product stocks in three major petroleum product trading and refining centers-the U.S. Gulf Coast, the Amsterdam-Rotterdam-Antwerp (ARA) region, and Singapore. Between April and September, the five-day moving average crack spread for each product in all regions, except for U.S. Gulf Coast gasoline, declined to their lowest levels since at least 2011 (Figure 1). September crack spreads remained significantly lower than their previous five-year (2015-19) averages. EIA has reduced its forecast for 2021 global consumption of petroleum and other liquids as a result of lowered expectations for economic growth in both 2020 and 2021, leading to a balanced global inventory outlook in 2021. …EIA: This Week in Petroleum

U.S. crude oil producers increased the amount and share of production covered by financial hedges in Q2 2020 (9/30/2020)

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According to the U.S. Energy Information Administration’s (EIA) analysis of financial disclosures from 77 publicly traded U.S. crude oil producers, financial hedging activity in the second quarter (Q2) of 2020 increased year on year from the second quarter of 2019. As of their second quarter filings, these 77 companies entered into hedging contracts covering 673 million barrels of crude oil for the next four quarters, compared with the 583 million barrels of coverage provided during the same time last year (Figure 1). These companies collectively accounted for 3.9 million barrels per day (b/d), or 36% of total U.S. crude oil production, in Q2 2020. Crude oil producers enter into hedging contracts to lock in a specific price or range of possible prices that they will receive when selling their oil production in the future, thereby minimizing exposure to changing prices and increasing the stability and predictability of revenues. If these companies produce at the same levels they averaged during Q2 2020, these hedges would cover 47% of production during the following year, up from 41% during the equivalent period in Q2 2019. …According to the U.S. Energy Information Administration’s (EIA) analysis of financial disclosures from 77 publicly traded U.S. crude oil producers, financial hedging activity in the second quarter (Q2) of 2020 increased year on year from the second quarter of 2019. As of their second quarter filings, these 77 companies entered into hedging contracts covering 673 million barrels of crude oil for the next four quarters, compared with the 583 million barrels of coverage provided during the same time last year (Figure 1). These companies collectively accounted for 3.9 million barrels per day (b/d), or 36% of total U.S. crude oil production, in Q2 2020. Crude oil producers enter into hedging contracts to lock in a specific price or range of possible prices that they will receive when selling their oil production in the future, thereby minimizing exposure to changing prices and increasing the stability and predictability of revenues. If these companies produce at the same levels they averaged during Q2 2020, these hedges would cover 47% of production during the following year, up from 41% during the equivalent period in Q2 2019. …EIA: This Week in Petroleum

In 2020, increased propane, other HGL exports contribute to continued strong product exports despite reductions in major transport fuels (9/23/2020)

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In the first half of 2020, the United States exported 5.4 million barrels per day (b/d) of petroleum products, a slight increase of 48,000 b/d (1%) from the first half of 2019. The increase in exports occurred despite global demand declines because of responses to the outbreak of the 2019 novel coronavirus disease (COVID-19). Increased exports of petroleum products from the United States came primarily from propane and other hydrocarbon gas liquids (HGL), while exports of other refined products, including gasoline, distillate, and jet fuel, decreased in the first half of 2020 compared with the first half of 2019. …In the first half of 2020, the United States exported 5.4 million barrels per day (b/d) of petroleum products, a slight increase of 48,000 b/d (1%) from the first half of 2019. The increase in exports occurred despite global demand declines because of responses to the outbreak of the 2019 novel coronavirus disease (COVID-19). Increased exports of petroleum products from the United States came primarily from propane and other hydrocarbon gas liquids (HGL), while exports of other refined products, including gasoline, distillate, and jet fuel, decreased in the first half of 2020 compared with the first half of 2019. …EIA: This Week in Petroleum

First half 2020 U.S. crude oil exports increase year over year despite declines beginning in March (9/16/2020)

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U.S. net imports of crude oil (imports of crude oil minus exports of crude oil) declined in the first half of 2020 compared with the first half of 2019. However, monthly net imports increased in May and June 2020 as U.S. exports declined and imports increased. U.S. crude oil exports in the first half of 2020 were higher than in the first half of 2019 despite declining since the record high in February 2020 (Figure 1). Monthly crude oil imports declined sharply in April before increasing in May and June, but U.S. crude oil imports in the first half of 2020 were much lower than levels seen during the same period in 2019. The decline in trade volume (falling exports since March and declining in imports in April) came as responses to the spread of the 2019 novel coronavirus disease (COVID 19) reduced petroleum demand. …U.S. net imports of crude oil (imports of crude oil minus exports of crude oil) declined in the first half of 2020 compared with the first half of 2019. However, monthly net imports increased in May and June 2020 as U.S. exports declined and imports increased. U.S. crude oil exports in the first half of 2020 were higher than in the first half of 2019 despite declining since the record high in February 2020 (Figure 1). Monthly crude oil imports declined sharply in April before increasing in May and June, but U.S. crude oil imports in the first half of 2020 were much lower than levels seen during the same period in 2019. The decline in trade volume (falling exports since March and declining in imports in April) came as responses to the spread of the 2019 novel coronavirus disease (COVID 19) reduced petroleum demand. …EIA: This Week in Petroleum

OPEC+ production cuts between January and August 2020 contributed to global oil market rebalancing (9/10/2020)

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As global demand for petroleum liquids declined significantly in March and April 2020, global oil inventories increased at record levels, rising by an average of 5.9 million barrels per day (b/d) in the first quarter and 7.2 million b/d in the second quarter of 2020. As a result of the lower demand and ample global oil inventories, global crude oil prices fell in March and April to record lows. In response to these market conditions, on April 15, members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) agreed to reduce crude oil production. The OPEC+ agreement called for a decrease in crude oil output by a combined 9.7 million b/d in May and June, a combined decrease of 9.6 million b/d in July 2020, and a combined decrease of 7.7 million b/d in August (not accounting for compensation cuts for under-complying countries). Compared with January levels, OPEC+ production fell by an estimated 5.9 million b/d in May, 7.9 million b/d in June, 7.1 million b/d in July, and 5.6 million b/d in August. U.S. Energy Information Administration (EIA) data show that OPEC production in May decreased by 6.0 million b/d from April, which was the largest monthly production decline on record. Between January and July 2020, OPEC crude oil production decreased by 5.7 million b/d. The non-OPEC partner countries reduced their production by 2.8 million b/d in July from production levels in January 2020. EIA data for non-OPEC producers include crude oil and condensate production. …As global demand for petroleum liquids declined significantly in March and April 2020, global oil inventories increased at record levels, rising by an average of 5.9 million barrels per day (b/d) in the first quarter and 7.2 million b/d in the second quarter of 2020. As a result of the lower demand and ample global oil inventories, global crude oil prices fell in March and April to record lows. In response to these market conditions, on April 15, members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) agreed to reduce crude oil production. The OPEC+ agreement called for a decrease in crude oil output by a combined 9.7 million b/d in May and June, a combined decrease of 9.6 million b/d in July 2020, and a combined decrease of 7.7 million b/d in August (not accounting for compensation cuts for under-complying countries). Compared with January levels, OPEC+ production fell by an estimated 5.9 million b/d in May, 7.9 million b/d in June, 7.1 million b/d in July, and 5.6 million b/d in August. U.S. Energy Information Administration (EIA) data show that OPEC production in May decreased by 6.0 million b/d from April, which was the largest monthly production decline on record. Between January and July 2020, OPEC crude oil production decreased by 5.7 million b/d. The non-OPEC partner countries reduced their production by 2.8 million b/d in July from production levels in January 2020. EIA data for non-OPEC producers include crude oil and condensate production. …EIA: This Week in Petroleum

Lowest U.S. average regular gasoline retail price heading into Labor Day weekend since 2004 (9/2/2020)

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The U.S. average regular gasoline retail price as of the Monday before Labor Day weekend is $2.22 per gallon (gal) this year, the lowest level for this time of year since 2004 (Figure 1). The Labor Day holiday is typically the end of the summer driving season, the time when gasoline demand is usually greatest during the year. Because of responses to the 2019 novel coronavirus disease (COVID-19) and efforts to mitigate its spread, however, monthly U.S. gasoline consumption (as measured by product supplied) has remained less than the previous five-year (2015-19) range since March. The low price going into Labor Day 2020 reflects continued weak gasoline demand following a summer that saw reduced commuter and recreational travel activity. …The U.S. average regular gasoline retail price as of the Monday before Labor Day weekend is $2.22 per gallon (gal) this year, the lowest level for this time of year since 2004 (Figure 1). The Labor Day holiday is typically the end of the summer driving season, the time when gasoline demand is usually greatest during the year. Because of responses to the 2019 novel coronavirus disease (COVID-19) and efforts to mitigate its spread, however, monthly U.S. gasoline consumption (as measured by product supplied) has remained less than the previous five-year (2015-19) range since March. The low price going into Labor Day 2020 reflects continued weak gasoline demand following a summer that saw reduced commuter and recreational travel activity. …EIA: This Week in Petroleum

As lockdowns ease, May gasoline demand increases and crude oil production slows (8/5/2020)

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The U.S. Energy Information Administration’s (EIA) data show that demand (tracked by EIA as product supplied) for gasoline increased month-over-month in May as many states began to relax stay-at-home orders, while demand for jet fuel continued to decline to historic lows because of reduced commercial air travel. The May data also show a decline in crude oil inventories—because of a narrow uptick in crude oil runs (or crude oil inputs to refineries)—and a large decline in crude oil production. EIA’s July Petroleum Supply Monthly (PSM), which includes the complete set of key U.S. petroleum data from May 2020, shows how crude oil and petroleum product markets continue to be affected by the changing measures taken to mitigate the spread of the 2019 novel coronavirus disease (COVID-19). …The U.S. Energy Information Administration’s (EIA) data show that demand (tracked by EIA as product supplied) for gasoline increased month-over-month in May as many states began to relax stay-at-home orders, while demand for jet fuel continued to decline to historic lows because of reduced commercial air travel. The May data also show a decline in crude oil inventories—because of a narrow uptick in crude oil runs (or crude oil inputs to refineries)—and a large decline in crude oil production. EIA’s July Petroleum Supply Monthly (PSM), which includes the complete set of key U.S. petroleum data from May 2020, shows how crude oil and petroleum product markets continue to be affected by the changing measures taken to mitigate the spread of the 2019 novel coronavirus disease (COVID-19). …EIA: This Week in Petroleum

Aggregate and well-level data show magnitude and drivers of North Dakota’s declining crude oil production (8/12/2020)

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The sharp decline in petroleum demand caused by the 2019 novel coronavirus disease (COVID-19) and efforts to contain it has led to a similarly significant decline in the supply of petroleum in the second quarter 2020 and, by extension, crude oil production, both internationally and domestically. According to data from the U.S. Energy Information Administration (EIA), total U.S. crude oil production declined by 21.9% between December 2019 and May 2020, with the Federal Offshore Gulf of Mexico falling by 18.2%, Alaska by 16.0%, and the Lower 48 states (excluding North Dakota) by 19.4% (Figure 1). Although significant production declines were reported throughout much of the United States, North Dakota’s reduction is particularly notable given its speed and severity; the state’s production experienced a 41.6% decline between December 2019 and May 2020. …The sharp decline in petroleum demand caused by the 2019 novel coronavirus disease (COVID-19) and efforts to contain it has led to a similarly significant decline in the supply of petroleum in the second quarter 2020 and, by extension, crude oil production, both internationally and domestically. According to data from the U.S. Energy Information Administration (EIA), total U.S. crude oil production declined by 21.9% between December 2019 and May 2020, with the Federal Offshore Gulf of Mexico falling by 18.2%, Alaska by 16.0%, and the Lower 48 states (excluding North Dakota) by 19.4% (Figure 1). Although significant production declines were reported throughout much of the United States, North Dakota’s reduction is particularly notable given its speed and severity; the state’s production experienced a 41.6% decline between December 2019 and May 2020. …EIA: This Week in Petroleum