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US fuel inventories fall as demand rebounds

August 27/2020

MOSCOW (MRC) --  US crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, according to Hydrocarbonprocessing with reference to a government report.

Refinery utilization rose 1.4 percentage points to 81% of total capacity nationally in the week to Aug. 7, the Energy Information Administration said in a weekly report. On the East Coast, refinery utilization rates climbed to 71.8% of total capacity, the highest since August 2019, according to the data.

US fuel demand rose to 19.37 million barrels per day last week, the highest since March, reducing gasoline and diesel inventories even as refineries produced more fuel.

"We're seeing the demand bounce back," said Phil Flynn, senior energy analyst at Price Futures Group. "The market is tightening a lot quicker than people thought."

The market has recovered from the doldrums of April, when US crude futures briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the COVID-19 pandemic.

Crude prices gained as much as 2% in the 30 minutes after the report was released. US crude was last trading 61 cents, or 1.5%, higher at USD42.22 a barrel by 12:28 p.m. EDT (1628 GMT), while Brent crude rose 67 cents, or 1.1% to USD45.17.

Gasoline stockpiles fell 722,000 barrels, the EIA said, exceeding analysts' estimates for a 647,000-barrel drop.

Distillate stockpiles, which include diesel, jet fuel and heating oil, fell by 2.3 million barrels, compared with expectations for a 400,000-barrel increase, the EIA data showed.

"Distillate, which has been the weak sister because of jet demand, had a big drawdown. That all is playing into the idea that demand is getting a little bit better," Flynn said.

Crude inventories fell 4.5 million, compared with analysts' expectations in a Reuters poll for a 2.9 million-barrel drop.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.3 million barrels last week, EIA said. US Gulf Coast crude stockpiles posted their biggest combined three-week drop on record, according to the report.

US crude output dropped to 10.7 million bpd from 11 million bpd the previous week, according to the report.

"The most surprising statistic was the decline in oil production by 300,000 barrels per day at the same time that we've been hearing producers talking about restoring production," said Andrew Lipow, president of Lipow Oil Associates in Houston. "That's going to give more support to crude oil prices for the balance of the year."

As MRC reported earlier, US crude oil stockpiles fell in the second week of August even as net imports jumped sharply, while fuel demand dipped as well, according to the US Energy Information Administration's statement. Crude inventories fell by 1.6 million barrels in the week to Aug. 14 to 512.5 million barrels, less than analysts expectations in a Reuters poll for a 2.7 million-barrel drop. Net US crude imports rose by 1.1 million barrels per day to 3.6 MMbpd, the EIA said.

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.

And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Margaret Volkova
Tags:Europe, PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Russia, USA.
Category:General News
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