MOSCOW (MRC) -- US petroleum inventories have fallen below the pre-pandemic five-year average with consumption accelerating but crude producers slow to respond to rising prices, signalling more supply is needed, reported Reuters.
Total stocks of crude and refined products outside the strategic petroleum reserve fell by 10 million barrels last week and are now down by 188 million barrels compared with the same point a year ago.
Total stocks have fallen in 38 out of the last 52 weeks as OPEC+ and US shale firms limit crude production even as product consumption recovers.
Inventories are 12 million barrels or 1% below the pre-pandemic five-year average for 2015-2019, according to data from the US Energy Information Administration.
The deficit is concentrated in crude, where inventories are 15 million barrels or 3% below the average, while there are still small surpluses in gasoline (3 million barrels or 1%) and distillates (2 million barrels or 1%).
The crude shortage has become especially acute around the delivery point for the NYMEX WTI contract at Cushing, Oklahoma, where crude stocks are 21% below the five-year average for 2016-2020.
The shortfall has pushed the WTI contract into a steep backwardation, with front-month futures trading at a premium of almost USD2.90 to the fourth delivery month, which is in the 7th percentile for all weeks since 2012.
On the refined products side, the volume of gasoline supplied to the domestic market hit a record 10.0 million barrels per day (bpd) last week, surging from 9.2 million bpd the previous week.
But gasoline supplied measures transfers from the primary petroleum system (refineries, import terminals, pipelines and tank farms) into the secondary system (wholesalers and retailers) rather than actual consumption by motorists.
As MRC wrote before, in early July, US crude stocks fell for the sixth straight week as refiners ramped up output in response to rising demand, according to the Energy Information Administration. Crude inventories fell by 6.7 million barrels in the week to June 25 to 452.3 million barrels, a steeper drop than the 4.7 million barrels expected by analysts in a Reuters poll.
We remind that Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world's third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC