(Repeats the April 9 column without change. John Kemp is a Reuters market analyst. The opinions expressed are his)
* Chartbook: reut.rs/34oRBx5
By John Kemp
LONDON, April 9 (Reuters) – Global oil producers and refiners are grappling with an unprecedented series of upheavals as the epidemic and the simultaneous war of volumes between Saudi Arabia and Russia cross all elements of the Supply Chain.
An idea of the extraordinary speed and magnitude of the disruption was evident in the “Weekly Petroleum Status Report” published Wednesday by the U.S. Energy Information Administration.
The United States is the world’s largest consumer and producer of oil, although it is not fully representative of the entire global market.
But its weekly oil data has a disproportionate influence because it provides the fastest and most readily available statistics on the evolution of the production-consumption balance.
The latest weekly report reveals an industry in crisis – unable to cope with the simultaneous collapse of fuel consumption and increasing crude oil production.
Inventories are increasing at an unsustainable rate which will soon fill all the storage space available in shore-based storage facilities as well as in tankers moored offshore.
Petroleum products delivered to the domestic market, an indicator of total consumption, fell by 7 million barrels per day (b / d) or by a third in just three weeks between March 13 and April 3 (reut.rs/ 34oRBx5).
This drop was equivalent to more than eight standard deviations for any three-week period since 1992. The sudden collapse in consumption has no parallel in history, not even the depression years of the 1930s.
In terms of volume, gasoline consumption was the hardest hit, as business closings, homework and home support orders had a profound effect on the private automobile.
Gasoline supplied to the domestic market decreased by 4.6 million b / d, or nearly 48%, between March 13 and April 3, which means that household travel was cut in half.
But as a percentage, jet fuel consumption was hit the hardest, down almost 1 million b / d or 56%, with airlines canceling flights and planes on the ground.
Distillate consumption has been the least affected so far, down only 0.2 million b / d or 5%, probably because most factories and freight transportation are still in operation, for the most part. ‘instant.
As consumption has disappeared, refineries have been forced to reduce the volume of crude they process to avoid an unsustainable accumulation of unused fuels.
US refineries have cut crude oil processing by almost 2.2 million barrels per day in the past three weeks, a reduction never seen before when refineries on the Gulf Coast were directly affected by a major hurricane .
Refiners handled only 13.6 million b / d of crude last week, compared to 16.1 million b / d at the same time last year, and the lowest seasonal rate in at least 15 years .
Drowning in oil
Despite reduced processing rates, inventories of unused product and unrefined crude oil are increasing, threatening to overwhelm storage facilities and pipelines.
Total US inventories of crude oil and petroleum products, excluding the strategic petroleum reserve, have jumped 56.5 million barrels in the past three weeks.
Total stocks jumped to a record 33 million barrels last week, after increasing 21 million barrels the previous week, the fourth largest weekly increase since 1990.
Inventories are now just 15 million barrels below their highest level recorded for this time of the year, set in April 2017, and 54 million barrels below their highest level at any time of the year, set. in August 2016.
Even more crude oil is in transit to the United States from Saudi Arabia, which will further increase inventories (“The Saudi crude oil armada is headed for the United States”, Bloomberg, April 8).
At least seven very large crude oil carriers have left Saudi Arabia so far this month with reported destinations like the United States, carrying a total of 14 million barrels, heading to an already flooded market for oil in excess.
– Oil production in the United States is expected to plunge as storage fills (Reuters, April 1)
– World oil storage will fill quickly as consumption plummets (Reuters, March 27) (Edited by David Evans)