COVID-19's impact on global commercial jet fuel demand has been significant and uneven (7/29/2020)

Efforts to contain the 2019 novel coronavirus disease (COVID-19) have dramatically reshaped markets for key petroleum fuels, and consumption patterns for jet fuel have seen some of the largest changes. According to the International Energy Agency, global jet fuel demand averaged 8.0 million barrels per day (b/d) in 2019, which is less than both gasoil/diesel demand (28.9 million b/d) and gasoline demand (26.4 million b/d). But, air travel-and by extension jet fuel demand-has proved particularly vulnerable to the disruptions caused by COVID-19 mitigation efforts. As of July 29, 2020, of the 37 member states of the Organization for Economic Cooperation and Development (OECD), 32 are partially or completely closed to international air travel as a result of COVID-19 mitigation efforts. Only four remain free of restrictions, and one is in the process of reopening soon, according to data from travel company Booking Holdings Inc. In addition, air travel's high passenger density requirements, large share of nonbusiness travelers, and the long distances involved have further dampened demand. ... More »

Product crack spreads increase from recent lows but face uncertain demand, high inventories (7/22/2020)

U.S. gasoline and diesel crack spreads (the difference between the price of crude oil and the wholesale price of the petroleum product, which are used as estimates of refinery margins) diverged sharply in March as the 2019 novel coronavirus disease (COVID-19) spread. As COVID-19 mitigation efforts and travel restrictions were put in place, gasoline demand (as measured by product supplied) fell, pulling gasoline crack spreads down. During the same period, demand for diesel fuel remained relatively strong, which contributed to a sharp increase in diesel crack spreads. In April, diesel yields increased as demand fell, reducing the diesel crack spread, while gasoline demand began to increase. Since then, gasoline and diesel crack spreads in the U.S. Gulf Coast (home to about half of the U.S. refining capacity) have stabilized and moved together (Figure 1). However, high gasoline and distillate inventory levels are putting downward pressure on product prices and the crack spread, and the demand outlook remains uncertain. ... More »

U.S. oil producers wrote down asset values, announced spending cuts in first quarter of 2020 (7/15/2020)

According to their publicly filed financial statements, 40 U.S. oil producers collectively wrote down $48 billion worth of assets in the first quarter of 2020. Low oil prices contributed to significant declines in revenue and the value of proved reserves for these companies. Writing down the value of an asset—also called an impairment—is a non-cash adjustment when a company formally acknowledges the value of an oil property has declined below the cost of developing it and the company updates the estimated fair value. First-quarter 2020 financial results also reveal steps many companies took to stabilize cash flows, including increased use of credit and announcements of significant cuts to capital expenditure budgets. ... More »

EIA forecasts global stock draws through 2021 (7/8/2020)

The disruptions to global petroleum supply and consumption as a result of the 2019 novel coronavirus disease (COVID-19) and associated mitigation efforts have been significant. As road and air travel fell sharply when economies around the world went into lockdown in the first quarter and early second quarter of 2020, global liquid fuels consumption fell more quickly than production. Based on the mismatch between production and consumption of liquid fuels, the U.S. Energy Information Administration (EIA) estimates that global oil inventories increased by almost 1.3 billion barrels from the start of 2020 through the end of May. Inventory growth caused Brent crude oil spot prices to fall from a monthly average of $64 per barrel (b) in January to $18/b in April. In late April, when price declines were the steepest, market participants had concerns about the ability of global storage capacity to hold the quickly rising inventory. The situation in global oil markets has now shifted, however, and EIA's July Short-Term Energy Outlook (STEO) forecasts global stock draws in every quarter moving forward through 2021. ... More »

April data indicate record increase in U.S. crude oil inventories, record decreases in refinery runs and demand (7/1/2020)

On March 13, 2020, President Trump declared a national emergency in the United States in response to concerns regarding the 2019 novel coronavirus disease (COVID-19) outbreak. The U.S. Energy Information Administration's (EIA) June Petroleum Supply Monthly (PSM), which includes the first complete set of key U.S. crude oil data from April 2020 (the first complete month after the declaration of the national emergency), shows the significant behavioral effects of the several measures taken to mitigate the spread of COVID-19 and of the virus itself. The April data include record month-over-month changes in several key areas, including refinery runs, product supplied for motor gasoline and jet fuel, and ending stocks for crude oil. ... More »