Oil prices slumped amidst concerns of oversupply. The market expects that the coordinated cuts announced last week, even if implemented smoothly, will fail to offset the severe contraction in demand. The latest report by International Energy Agency (IEA) suggested that global demand will fall to the lowest level in 25 years. It added that the situation will remain dismal even after travel restrictions are removed among countries. Global demand is projected to slumped by a record of -29M bpd in April, the sharpest decline in a quarter of a century. According to the agency, the decline in demand in light of the coronavirus pandemic could lead to a stock build of 12M bpd in 1H20, despite the OPEC+ decision to cut collective production by 9.7 million bpd in May and June. It warned that oversupply “still threatens to overwhelm the logistics of the oil industry – ships, pipelines and storage tanks – in the coming weeks”.
In the US, the world’s largest oil producer, inventories continued to build significantly last week. The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks surged +21.77 mmb to 1341.57 mmb in the week ended April 10. Crude oil inventory soared +19.25 mmb (consensus: +11.68 mmb) to 503.62 mmb. Stockpile rose in 4 out of 5 PADDs. PADD 3 (Gulf Coast) saw a build of 10.24 mmb. PADD a (East Coast) saw a -0.68 mmb drop. Cushing stock gained +5.72 mmb to 54.97 mmb. Utilization rate declined -6.5 percentage points to 69.1% while crude production slipped -0.1M bpd to 12.3M bpd for the week. Crude oil imports slipped -0.19M bpd to 5.68M bpd in the week.
Concerning refined oil product inventories, gasoline inventory gained +4.91 mmb to 262.22 mmb although demand edged higher, by +0.32% to 5.08M bpd. The market had anticipated a +6.39 mmb increase in stockpile. Production added +1.23% to 5.92M bpd while imports plunged -71.33% to 0.4M bpd during the week. Distillate inventory jumped +6.28 mmb to 129 mmb. The market had anticipated a +1.44 mmb increase. Demand dived -27.58% to 2.76M bpd. Production slipped -1.1% to 4.93 mmb while imports soared +69.19% to 0.31M bpd during the week.
Released after market close on Wednesday, the industry-sponsored API estimated that crude oil inventory soared +13.1 mmb during the week. For refined oil products, gasoline stockpile gained +2.23 mmb while distillate rose +5.64 mmb.