National stocks of crude are falling again; IEA Says Prospects for Global Oil Demand Brighten

Inventories of U.S. crude fell for the third week in a row as domestic demand increased, federal data showed Wednesday.

A separate global forecast, meanwhile, indicated an increase in oil consumption through 2021, as coronavirus vaccination programs gain momentum and economic activity increases.

In his Weekly State of Oil Report (WPSR), the U.S. Energy Information Administration (EIA) said domestic crude inventories for the week ended April 9 fell 5.9 million barrels from the previous week. The count excludes supplies in the strategic oil reserve.

At 492.4 million barrels, the EIA said U.S. stocks were 1% above the five-year average.

The agency reported that aggregate demand increased by nearly 6% week / week, due to increased consumption of fuel oil and gasoline.

U.S. refineries operated at 85% capacity last week, up one percentage point from the previous week and extending a recovery from the outages caused by winter storm Uri in February. Usage had dropped to 56% by mid-February.

The average daily demand for finished motor gasoline was up 2% week / week and was essentially stable from the comparable week of the previous year. This marked a noticeable improvement from most weeks since the start of the pandemic. With travel restrictions in place, demand for gasoline has often been lower year over year.

Refinery usage for the past week “was the highest total in 55 weeks,” while gasoline consumption “was the highest total in 33 weeks,” analysts at ClearView Energy Partners LLC said. .

Total demand over the past four weeks has averaged 19.6 million barrels per day, up 20% from the same period last year, the EIA said. Over the past four weeks, motor gasoline consumption has averaged 8.8 million barrels per day, up 37% from the previous year. Year-to-year comparisons have started to reflect both the virus-induced demand destruction achieved in late March and April of last year, and the gradual increase in consumption this spring.

U.S. crude production averaged 11.0 million b / d last week, up 100,000 b / d from the previous week, but still more than 2.0 million b / d below from the 2020 peak of 13.1 million bpd for the week of March 13 of last year, just ahead of widespread virus outbreaks in the Lower 48.

AEI increase forecast

The International Energy Agency (IEA), for its part, on Wednesday raised its world oil consumption forecast this year of 230,000 b / d, an increase of 5.7 million b / d, citing the dynamics of the United States and China, the world’s two largest economies. He pointed to a recent global forecast from the International Monetary Fund for gross domestic product growth of 6% in 2021.

The Paris-based IEA has estimated that demand for oil in 2021 will reach 96.7 million bpd. He also said the supply was on the rise. Global oil supply increased from 1.7 million barrels per day in March to 92.9 million barrels per day after shutdown U.S. production recovered from the severe Arctic freeze that crippled the Texas energy sector in February.

“Further gains from the United States, Brazil and biofuels are expected to increase global supply in April,” the agency said.

“The massive surplus in global oil stocks that accumulated during last year’s Covid-19 demand shock is being phased out, vaccination campaigns are accelerating and the global economy seems to be on a better footing, “added IEA researchers.

While the IEA forecast would leave demand at around 3% of pre-pandemic levels in 2019, it joins a growing chorus of optimistic prospects and growing confidence in economic strength this year.

Rystad Energy analyst Bjornar Tonhaugen noted on Wednesday that trade restrictions linked to the pandemic are still hampering parts of the globe, including Europe. And while vaccine deployments prove to be effective, success is gradual and uneven. This week, for example, US officials called for a hiatus on the use of Johnson & Johnson’s single-dose vaccine, noting that six women had developed blood clots within three weeks of the injections.

“Despite the continuing set of new hurdles in vaccine navigation and the lifting of blockages, we still believe that, overall, optimism for the economic recovery will push oil demand to end 2021 strong,” he said. said Tonhaugen.

The new IEA forecast followed optimistic prospects for demand from the Organization of the Petroleum Exporting Countries (OPEC). The cartel forecast on Tuesday that demand would increase by 5.95 million bpd this year, an increase of almost 7% from 2020.

With demand expectations rising, the Saudi-led cartel and its allies, aka OPEC-plus, agreed earlier this month to increase crude production from May. The group plans to increase production by 350,000 bpd in May and June, then increase to 450,000 bpd in July. Saudi Arabia also plans to start rolling back cuts it made earlier this year.

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Felix J. Dixon