FIRST STAGE OF OIL DEMAND DESTRUCTION: U.S. Supply Of Petroleum Products Down 7 Million Barrels Per day
The U.S. is only in the FIRST STAGE of the country’s oil demand destruction. Since the nationwide shutdown announced by the U.S. Government in mid-March, domestic oil demand has fallen more than 7 million barrels per day. In just the past three weeks, the total U.S. petroleum products supplied to the market fell by 33%.
However, I don’t believe we have seen the low yet in U.S. total oil demand. According to the EIA – U.S. Energy Information Agency, total petroleum products supplied to the market on April 3rd were 14.4 million barrels per day (mbd) compared to 21.5 mbd for March 13th.
FIRST STAGE: Oil Demand Destruction To Peak Within 3-4 weeks
Over the next 3-4 weeks, I see the total U.S. petroleum products supplied to the market falling to the 12 mbd level (or even lower). With 96% of U.S. airline passenger traffic now lost and a 65-75% reduction of domestic vehicle traffic, the data released for April 3rd still haven’t factored in all the demand destruction.
For example, U.S. gasoline supplied to the market is down 48% while Jet fuel is off 56%. When U.S. gasoline supplies fall by 60-75% and Jet fuel down by 80%, then we will likely reach a bottom. However, this doesn’t include other petroleum products such as Propane/Propylene (1.1 mbd) and other oils (3.7 mbd):
As we can see, gasoline supplies fell the most in volume, followed by jet fuel. If we just focus on U.S. gasoline, diesel, and jet fuel, the total products supplied fell 5.8 mbd, or 38%. Diesel supplies are holding up rather well due to the critical transportation via semi-tractors, rail, and ship… all which use diesel fuels.
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