MOSCOW (MRC) -- US crude oil and refined product inventories fell sharply in last week due in part to a notable drop in crude imports, reported Reuters with reference to the Energy Information Administration's statement.
Crude inventories fell 7.5 million barrels in the week to July 10 to 531.7 million barrels, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop. The decline was driven by a steep drop in imports, which fell by a net 2 million barrels per day (bpd), the EIA said.
Oil prices rose on the news. U.S. crude futures were up 48 cents, or 1.2%, to USD40.80 a barrel as of 10:53 a.m. ET (1453 GMT) while Brent gained 61 cents, or 1.4%, to USD43.51 a barrel.
US imports of oil from Mexico returned to more typical levels at 490,000 bpd in the most recent week, after a surprising spike to an eight-year high in the previous period.
US gasoline stocks fell by 3.1 million barrels in the week, the EIA said, compared with expectations for a 643,000-barrel drop.
Gasoline demand, meanwhile, dipped modestly as more US states have reimposed lockdowns as coronavirus cases and deaths are spiking anew. Overall gasoline supplied over the last four weeks, a proxy for demand, is 9% below the same period a year ago.
"The gasoline demand number is very weak, and with the coronavirus situation worsening, it's only going to get worse. That's going to be a weight on the market, and that's an increasing focus for everyone," said John Kilduff, partner at Again Capital in New York.
Distillate stockpiles, which include diesel and heating oil, fell by 453,000 barrels, versus expectations for a 1.5 million-barrel rise. However, Gulf Coast distillate inventories rose last week to 58.6 million barrels, their highest on record, the data showed.
As MRC informed previously, global oil consumption cut by up to a third in Q1 2020. 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.
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.