MOSCOW (MRC) -- U.S. crude oil stockpiles rose unexpectedly last week to an all-time high as refiners boosted imports, particularly from Saudi Arabia, while exports dropped to lows not seen since November, reported Reuters.
The Energy Information Administration also said on Wednesday that refined product demand ticked up, but still remained far below normal levels.
Crude inventories rose 5.7 million barrels in the week to June 5 to 538.1 million barrels, most in history, not including the U.S. strategic reserves, EIA data showed.
Shipments booked during the Saudi-Russia price war from March and April, when the kingdom ramped up exports sending U.S. prices to negative-USD40 a barrel, have been arriving in the United States. Refiners’ imports of Saudi barrels have averaged more than 1.5 million barrels per day (bpd) for three consecutive weeks, which has not happened since 2013.
Crude inventories in the Gulf Coast import-export and refining hub jumped 6.9 million barrels to a record 303.7 million barrels. U.S. exports fell to 2.4 million bpd, their lowest since November, so overall net crude imports rose by 1 million bpd, the EIA said.
“These are bearish numbers really. Crude (stocks) rose again despite being stymied by subdued demand. We are down significantly from a year ago today and saw builds in products as well,” said Matt Smith, director of commodity research at Clipper Data.
Gasoline inventories rose 866,000 barrels, compared with analysts’ expectations for a 71,000-barrel rise. Distillate stockpiles, which include diesel and heating oil, increased by 1.6 million barrels.
Product supplied, a proxy for demand, showed gasoline consumption rebounded to 7.9 million bpd, still roughly 20% below the year-ago period, but an improvement from recent weeks. Overall gasoline demand is down 16% from a year ago.
Refinery utilization rates rose by 1.3 percentage points to 73.1% of capacity.
The market was lower after the data. U.S. crude futures fell 2% to USD38.18 a barrel, while Brent was down 1.4% to USD40.60 a barrel.
As MRC informed previously, global oil consumption cut by up to a third. 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 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.