MOSCOW (MRC) -- US crude oil stockpiles dropped last week to their lowest levels since January 2020, reported Reuters with reference to the Energy Information Administration's statement.
Inventories have been declining for several months as US fuel demand has rebounded with Americans getting vaccinated against coronavirus. Infections, however, are surging again and analysts are watching to see if fuel demand slackens, particularly across southern states where the number of people infected has surged.
Crude inventories fell by 3.2 million barrels in the week to Aug. 13 to 435.5 million barrels, exceeding estimates for a 1.1 million-barrel drop. Crude exports rose in the most recent week to 3.4 million barrels per day (bpd).
"The crude draw will be very supportive for the market. There's a good demand from exports, probably to do with the recent price decline," said John Kilduff, partner at Again Capital LLC in New York. "This report should push back against worries about the (coronavirus) Delta variant that have crept into the market."
At the Cushing, Oklahoma, delivery hub, crude stocks fell by 980,000 barrels in the last week, the EIA said. Inventories at the nation's largest oil storage hub and delivery point for US crude futures have dropped for 10 straight weeks and are now at their lowest levels since October of 2018, at 33.6 million barrels.
US gasoline stocks rose by 696,000 barrels in the week to 228.2 million barrels, the EIA said, compared with analysts' expectations for a 1.7 million-barrel drop.
Distillate stockpiles, which include diesel and heating oil, fell by 2.7 million barrels in the week to 137.8 million barrels, versus expectations for a 276,000-barrel rise.
Refinery crude runs fell by 191,000 barrels per day in the last week, EIA said. Refinery utilization rates rose by 0.4 percentage point, in the week.
The four-week average of overall product supplied to the market - a measure of demand - was 20.8 million barrels per day, in line with pre-coronavirus levels from 2019.
US crude production rose to 11.4 million bpd, though weekly figures are volatile. Shale oil production, which accounts for most of US output, is expected to rise to 8.1 million bpd in September, its highest since April 2020, according to the EIA's monthly drilling output report.
As MRC informed earlier, US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
We remind that US ethylene exports have declined and shifted from Asia to Europe as US producers focus on restocking inventories in the aftermath of a deep freeze that hit the US Gulf Coast in mid-February and subsequent operational issues that squeezed output. At the same time, US ethylene inventories remain at five-year lows amid hurricane season, and producers remain focused on building inventory. August and September tend to be the months during the June-November US Atlantic hurricane season when major storms are most likely to develop and hit the US Gulf Coast.
Ethylene is the main feedstock for the production of polyethylene (PE).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased.
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