US crude oil stock builds hit a new weekly record in the week ending 10 April (week 15) as about 17.2 million bbl was sent into storage, Rystad Energy estimates. This new record is forecast to be beaten twice over the next two weeks, as we calculate stocks to increase by 23.7 million bbl next week and 24.3 billion bbl the week after that.
Stocks are building as a result of low oil demand. The Covid-19 pandemic and high global production have created one of the largest supply-demand imbalances in history. Consequently, refinery runs in the US are also in free fall to adjust to the market needs. Rystad Energy forecasts refinery intake to fall by 23.2% in April year-on-year, to 12.6 million bpd from 16.4 million bpd a year ago.
In fact, as more and more barrels will increasingly find their way into the storage system over the coming weeks, refinery crude intake could fall to as low as 12.0 million bpd by late April, according to our estimates.
The US Gulf Coast accounts for 1.5 million bpd of the monthly reduction and the West Coast for nearly 900 000 bpd. Midwest refiners are also expected to be hit hard given the landlocked geography and lack of direct access to the export market.
“With several states across the US mandating non-essential workers stay at home to restrain the spread of the coronavirus outbreak, we estimate that US gasoline demand is set to decline by an unprecedented 4.2 million bpd y/y in April 2020. The astonishing collapse in gasoline demand will likely push refiners to deepen run cuts and in some cases trigger shut-downs altogether,” says Paola Rodriguez-Masiu, Rystad Energy Senior Oil Markets analyst.
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