MOSCOW (MRC) -- US crude oil stocks plunged unexpectedly last week, tumbling by more than 6 million barrels, as refiners ramped up production rates to pre-pandemic levels in March amid rising fuel demand, reported Reuters with reference to the Energy Information Administration's statement.
Crude inventories fell by 6.6 million barrels in the week to Feb. 5 to 469 million barrels, compared with expectations in a Reuters poll for a 985,000-barrel rise.
Refinery utilization rates rose by 0.7 percentage point in the week to 83%, the highest level of refining utilization since March.
Refinery crude runs rose by 152,000 barrels per day in the last week, the EIA said, as refiners expect fuel demand to continue to rebound from last year's coronavirus-induced weakness.
Fuel demand was also higher, with refined product supplied rising to 20.2 million bpd. Gasoline demand over the last four weeks, however, is still 10% lower than at the same time a year ago.
Crude prices were little changed after the data, with US futures up six cents to USD58.43 a barrel as of 10:49 a.m. EST (1549 GMT), while Brent rose 19 cents to USD61.28 a barrel.
"A combination of higher refining activity and lower imports resulted in a fourth consecutive draw to oil inventories, and a chunky one at that," said Matt Smith, director of commodity research at ClipperData.
Net US crude imports rose last week by 216,000 bpd, EIA said.
US gasoline stocks rose by 4.3 million barrels in the week to 256.4 million barrels, compared with expectations for a 1.8 million-barrel rise.
Distillate stockpiles, which include diesel and heating oil, fell by 1.7 million barrels in the week, versus expectations for a 790,000-barrel drop.
As MRC wrote before, in its January Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) expects global demand for petroleum liquids will be greater than global supply in 2021, especially during the first quarter, leading to inventory draws. As a result, EIA expects the price of Brent crude oil to increase from its December 2020 average of USD50 per barrel (b) to an average of USD56/b in the first quarter of 2021. The Brent price is then expected to average between USD51/b and USD54/b on a quarterly basis through 2022.
We remind that global oil demand is expected to rise by nearly 7% this year, boosted by quicker vaccine distribution and a better economic outlook, according to consultancy Wood Mackenzie's statement. Total liquids demand is expected to average 96.7 million barrels per day (bpd) in 2021, 6.3 million bpd higher than last year when the Covid-19 pandemic caused an unprecedented oil demand shock. Refineries under the threat of closure could repurpose the facilities to produce liquid renewables instead of converting into a terminal, which could help oil companies’ aim of achieving carbon neutrality.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
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