API: US petroleum demand recovered 14% between April and May
US petroleum demand, as measured by total domestic petroleum deliveries, was 16.2 million b/d in May. This was 20.0% below the May 2019 level but reflected an increase of 14% from April—the largest percentage increase for any month since December 1975.
Jun 19th, 2020
American Petroleum Institute.
US petroleum demand, as measured by total domestic petroleum deliveries, was 16.2 million b/d in May, according to the American Petroleum Institute’s latest monthly statistical report. This was 20.0% below the May 2019 level but reflected an increase of 14% (2 million b/d) from April—the largest percentage increase for any month since December 1975.
More than 80% of the increase was driven by motor gasoline and the gradual loosening of stay-at-home orders to prevent transmission of COVID-19.
Consumer gasoline demand, measured by total motor gasoline deliveries, was 7.3 million b/d in May. This was an increase of 28.9% from April and the largest monthly increase on record since 1945. However, gasoline demand was still 22.5% below its level in May 2019 and at its lowest for the month since 1986.
Meanwhile, US average conventional gasoline prices remained low, rising by 1.2% (2.3¢/gal) following a 16.8% (39.1¢/gal) decrease in April, according to AAA.
The gasoline demand rebound appeared to be consistent across urban and rural areas. Between April and May, reformulated-type gasoline, which is consumed primarily in urban areas, increased by 27.3% m/m, while demand for conventional gasoline that is mainly consumed in rural areas increased by 29.7% m/m.
In May, distillate deliveries of 3.4 million b/d were down 17% compared with May 2019 but up 4.8% from April. Compared with gasoline, distillates demand did not drop as much through COVID-19 and also increased more gradually in May along with a rise in truck freight due to state economies reopening and a seasonal uptick in freight shipping volumes.
Kerosene jet fuel deliveries were 500,000 b/d in May, a decrease of 20% from April and 72.3% versus May 2019 – and the lowest deliveries since April 1967. Jet fuel was the only major refined product with deliveries that fell in May as COVID-19 air travel recovery remained elusive. US scheduled flights in May remained down by 48% compared with January per Flightradar24. The International Air Transport Association (IATA) reported that “April was the cruelest month” and with “evaporated passenger demand” projected airline financial losses of $84 billion in 2020.
Deliveries of residual fuel oil, which is used in electric power production, space heating, industrial applications and as a marine bunker fuel, were 141,000 b/d in May. This was the second lowest volume on record for any month since 1936.
Deliveries of liquid feedstocks, such as naphtha and gasoil (“other oils”) used in refining and petrochemical manufacturing, were 4.9 million b/d in May. This was a rebound of 7.3% (300,000 b/d) from April and also a record high for the month of May—and a potential sign of resilience in refining and petrochemical manufacturing.
In May, West Texas Intermediate (WTI) crude oil prices rose by $12.01/bbl to $28.56/bbl. Although this was a record 72.6% monthly crude price increase, it was still the lowest price for May since 2003 ($28.11/bbl).
By comparison, international Brent crude oil spot prices averaged $29.38/bbl in May, up by $11.00 from $18.38/bbl from April. With the May oil price rebound, the Brent-WTI price differential narrowed to $0.82/bbl in May— a slight discount for domestic US prices.
In futures markets, there appeared to be optimism that oil demand and therefore prices could rise, provided reasonable compliance with and an extension of OPEC+ cuts, plus further stimulus pumped into the global economy by US, European, and Japanese central banks. WTI price futures in May anticipated a 21% increase within 12 months.
US oil production
In May, US crude oil production fell to 11.4 million b/d, which was a decrease of 600,000 b/d from April and 1.5 million b/d from the peak in November 2019. May marked the sixth consecutive monthly decline and largest year-on-year decline for any month since September 2016. The drop was consistent with lower drilling activity in response to low oil prices.
Furthermore, May was the fourth largest monthly decrease in US crude oil production over the past 100 years.
By contrast, US natural gas liquids (NGL) production held relatively steady at 4.8 million b/d in May, down 0.8% m/m. NGLs are a co-product of natural gas production that EIA estimates fell by 2.4% in May.
For US crude oil, NGLs, and other liquids (refinery gain), the total supply fell by a combined 400,000 b/d in May and 2.0 million b/d since March. These production decreases corresponded with a record fall in US drilling activity per Baker Hughes, which reported oil-targeted drill rig activity of 206 rigs for the week ended June 5, down by 63% over the past 2 months and the lowest US rig count on record since 1987.
The US reverted to being a net petroleum importer in May. In May, US petroleum exports of crude oil and refined products were 7.2 million b/d. This represented decreases of 13.3% (1.1 million b/d) from April and 11.2% (900,000 b/d) compared with May 2019.
Within the total exports, 4.0 million b/d was refined products and 3.2 million b/d was crude oil. Although exports declined for three consecutive months, this was the first time since 2006 that exports fell y/y during the month of May. By contrast, US petroleum imports were 7.5 million b/d in May, up 300,000 b/d from April.
Refinery throughput at its lowest for May since 1987, but capacity utilization edged up from April. With petroleum demand having rebounded and export levels steady in May, US refinery throughput of 13.4 million b/d increased by 100,000 b/d, which was the first monthly increase so far in 2020. This throughput implied a capacity utilization rate of 70.6%, which was an increase of 0.5 percentage points from April, but also the second lowest rate for May on record since 1985.
Total inventories increased year-on-year for the 19th consecutive month. US total petroleum inventories, including crude oil and refined products but excluding the Strategic Petroleum Reserve, were 1.3 billion bbl in May and accumulated y/y for the 19th consecutive month, but within the 5-year range.
Within the total, as refinery throughput and finished product demand rebounded from record lows in April, crude oil stocks rose by 3.1% between April and May to their second highest amount on record (March 2017). In May, crude oil stocks were 4.0 million bbl below the record 538.6 million bbl.