U.S. crude oil stockpiles fell sharply last week while fuel inventories rose, the Energy Information Administration said on Wednesday, and 2020 came to a close with a sharp decline in overall demand due to the coronavirus pandemic.
Crude inventories fell by 8 million barrels in the week to Jan. 1 to 485.5 million barrels, their biggest decline since August, exceeding analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop. The drawdown in stocks is typical for the end of the year, when energy companies take barrels out of storage to avoid hefty tax bills.
Overall, in 2020 the United States experienced a heavy decline in crude production and demand due to the coronavirus pandemic. In the year, output fell to 11 million barrels per day from 12.9 million bpd, EIA said.
Fuel demand was impaired as well. Overall motor gasoline product supplied, a proxy for demand, dropped by 8.5% to 7.4 million bpd. Overall product supplied fell 12% on the year, and jet fuel consumption slumped by 43%.
“The story for the next several months will be how quickly demand will recover in light of the vaccine rollout,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
U.S. gasoline stocks rose by 4.5 million barrels last week, the biggest increase since April, the EIA said, ahead of expectations for a 1.5 million-barrel rise.
Distillate stockpiles, which include diesel and heating oil, rose by 6.4 million barrels, versus expectations for a 2.3 million-barrel rise.
Refinery crude runs rose by 89,000 bpd in the week, with utilization rates up 1.3 percentage points to 80.7% of capacity, their highest since August.
“We’ve burned through a lot of crude oil to make a lot of product, and there’s no demand for the product,” said Bob Yawger, director of energy futures at Mizuho in New York.
Oil prices were largely steady after the data. U.S. crude was up 41 cents to $50.33 a barrel as of 10:38 a.m. EST (1538 GMT), while Brent rose 64 cents, or 1.2%, to $54.24 a barrel.
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