MOSCOW (MRC) -- The price of US benchmark West Texas Intermediate (WTI) crude oil is near its highest level since 2014, increasing rapidly from low prices in mid-2020. Because of the economic effects, government and business responses, and personal travel changes caused by the COVID-19 pandemic in 2020, demand for crude oil and petroleum products declined rapidly, inventories increased, and prices fell, according to Hydrocarbonprocessing.
The demand decrease in the first half of 2020 resulted in increasing crude oil inventory levels. US crude oil inventories were 440.3 MM bbl at the end of January 2020 and increased to 532.7 MM bbl by the end of June 2020.
US crude oil inventories, however, returned to pre-pandemic levels, falling to 438.9 MM bbl in July 2021, which is below inventory levels in January 2020. Crude oil inventories reached a recent low of 413.9 MM bbl during the week of September 17, but they increased to 434.1 MM bbl during the week of October 29.
This year, demand for petroleum, both in the United States and globally, has largely returned to the pre-pandemic levels in 2019. Demand has grown faster than supply, reducing inventories and contributing to higher prices for crude oil and petroleum products. The price for WTI reached USD84 per bbl on November 1, up USD37/b since the beginning of the yr. Likewise, the price of Europe's crude oil benchmark, Brent, rose USD34/b over the same period, reaching USD85/b on November 1.
Refineries use crude oil as a feedstock to produce petroleum products. Refineries have increased operations (increasing their demand for crude oil) at a faster rate than US crude oil production has increased this year, contributing to the decline in US crude oil inventories. US crude oil inputs have nearly returned to the 2019 level for this time of yr, despite several refinery closures since 2020.
In contrast, US crude oil production has returned more slowly. In 2019, US crude oil production averaged 12.3 MMbpd. US crude oil production then fell to 9.7 MMbpd in May 2020. From October 1 through October 29, 2021, weekly data indicate that US crude oil production averaged 11.4 MMbpd.
As MRC reported earlier, in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that 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.