COVID-19’s Impact in U.S. Turning the Corner?

  1. Supply surplus shrinks
  2. Distillate inventories near normal
  3. Latest U.S. COVID-19 spike abates
  4. LNG exports go flat

Al pic 2009_cropped

Alan Levine—Chairman, Powerhouse
(202) 333-5380


The Matrix

Last year’s economic and social lockdown due to COVID-19 created a large surplus of crude oil and petroleum products. Prices softened dramatically. ULSD futures fell to $0.58. RBOB saw $0.3706 as its low. WTI crude oil fell to negative $40.32. These lows were short-lived, but they suggest the economic anxiety created by the pandemic.

The chart of distillate fuel oil stocks shows the inventory situation as the lockdown advanced. Supplies started to grow as the economic lockdown advanced. Distillate was at its five-year low as the lockdown began. Storage immediately began to build, and in late April 2020 reached a five-year maximum. In each subsequent week, distillate fuel oil established a new five-year maximum record. In October, supply slipped below the five-year maximum for the first time since April. Stocks are now slightly above the five-year average.

Propane inventory followed the same pattern as did distillates, but not as dramatically. Propane storage matched the five-year high of last year’s first quarter, but when distillate supply started to establish new highs, propane did not follow. This was reflected in propane’s ability to hold support while prices for other liquids fell.

Improved demand, taking from the excess inventory of 2020 or a more optimistic view of the situation with COVID-19 would be bullish. Data for recent weeks show a fourth spike in new cases being cut short. “Michigan and other states that experienced springtime COVID-19 surges or faced worrisome transmission trends appear to have turned a corner, with drops in new cases in recent days as vaccines reach more people,” according to the medical website STAT. “It appears vaccines are increasingly not just protecting individuals from COVID-19 but are starting to have broader benefits for communities.” This supports the bullish case.


Supply/Demand Balances

Supply/demand data in the United States for the week ended April 16, 2021, were released by the Energy Information Administration.

Total commercial stocks of petroleum rose by 3.6 million barrels during the week ended April 16, 2021.

Commercial crude oil supplies in the United States increased by 0.6 million barrels from the previous report week to 493.0 million barrels.

Crude oil inventory changes by PAD District:

PADD 1: Down 0.2 to 7.9 million barrels

PADD 2: Down 0.8 million barrels to 129.7 million barrels

PADD 3: Plus 1.3 million barrels to 285.1 million barrels

PADD 4: Plus 0.3 million barrels to 24.1 million barrels

PADD 5: Plus 0.1 million barrels to 46.3 million barrels


Cushing, Oklahoma, inventories were down 1.3 million barrels from the previous report week to 45.4 million barrels.

Domestic crude oil production was unchanged from the previous report week to 11.0 million barrels daily.

Crude oil imports averaged 5.405 million barrels per day, for a daily decrease of 448,000 barrels. Exports decreased 31,000 barrels daily to 2.548 million barrels per day.

Refineries used 85% of capacity, unchanged from the previous report week.

Crude oil inputs to refineries decreased 286,000 barrels daily; there were 14.765 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, rose 5,000 barrels daily to 15.424 million barrels daily.

Total petroleum product inventories rose 3 million barrels from the previous report week.

Gasoline stocks rose 0.1 from the previous report week; total stocks are 235.0 million barrels.

Demand for gasoline rose 160,000 barrels per day to 9.104 million barrels per day.

Total product demand decreased 1.566 million barrels daily to 18.762 million barrels per day.

Distillate fuel oil stocks fell 1.1 million barrels from the previous report week; distillate stocks are at 142.4 million barrels. EIA reported national distillate demand at 3.854 million barrels per day during the report week, a decrease of 273,000 barrels daily.

Propane stocks fell 0.1 million barrels from the previous report week to 40.5 million barrels. The report estimated current demand at 679,000 barrels per day, a decrease of 434,000 barrels daily from the previous report week.


Natural Gas

Henry Hub natural gas futures have mirrored recent action in energy liquids. Prices bottomed at $2.45 and rose to $2.78 with no meaningful follow through. Flat pricing came about despite higher demand in residential and commercial sectors. There was a gain of 9.8% in the weekly report estimate of demand. This was offset to some degree by flat LNG exports.

According to the EIA:

The net [natural gas] injections into storage totaled 38 Bcf for the week ended April 16, compared with the five-year (2016–20) average net injections of 37 Bcf, and last year’s net injections of 47 Bcf during the same week. Working natural gas stocks totaled 1,883 Bcf, which is 12 Bcf more than the five-year average and 251 Bcf lower than last year at this time.



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