MOSCOW (MRC) -- US crude oil stockpiles dropped sharply from record highs, as refining activity picked up and imports fell, reported Reuters with reference to the Energy Information Administration's statement.
Crude inventories fell by 7.2 million barrels in the week to June 26 to 533.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 710,000-barrel drop. Inventories are down from an all-time record of 540.7 million barrels set in mid-June, but remain 15% higher than the five-year average for this time of year.
Net US crude imports fell last week by 506,000 barrels per day, the EIA said. Imports had been elevated in recent weeks due to a flood of shipments arriving from Saudi Arabia that were booked as the kingdom boosted activity in April. Saudi imports came to 826,000 bpd in the most recent week, their lowest in six weeks.
“As OPEC+ continues to cut, the probability of reduced imports into the United States will remain,” said Tony Headrick, energy markets analyst at CHS Hedging.
Refinery crude runs, meanwhile, rose by 193,000 bpd and refinery utilization rates rose by 0.9 percentage point to 75.5% of overall capacity, the data showed.
Demand slipped in the most recent week, and the four-week average of product supplied still showed that figure off by 16% from the year-ago period.
Gasoline supplied was down by 15% from a year earlier, and traders worried that surging coronavirus cases in the United States would cut off the steady rebound in demand from April and May’s slump.
Crude futures were higher, but retraced some gains from prior to the data release. US crude gained 23 cents to USD39.51 a barrel by 11:17 a.m. ET (1517 GMT) while Brent rose 43 cents to USD41.70 a barrel.
“The main reason oil is pulling back is disappointing gasoline demand,” said Phil Flynn, senior analyst at Price Futures in Chicago.
Distillate stockpiles, which include diesel and heating oil, fell by 593,000 barrels in the week to 174.1 million barrels.
US gasoline stocks rose by 1.2 million barrels, the EIA said, compared with expectations for a 1.6 million-barrel drop.
As MRC informed before, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.
Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.
We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC