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FIRST STAGE OF OIL DEMAND DESTRUCTION: U.S. Supply Of Petroleum Products Down 7 Million Barrels Per day
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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THE UNITED STATES A NET OIL EXPORTER?? The Dirty Little Secret
THE UNITED STATES A NET OIL EXPORTER?? The Dirty Little Secret
The United States became a net oil exporter for the first time in 75 years, or so they say. While the U.S. may indeed be exporting more petroleum than it imports from time to time, there’s a dirty little secret behind the data. And one of those secrets overlooked by some energy analysts and the press is that the U.S. still imports 7 million barrels per day of oil.
So, why would the United States continue to import 7 million barrels per day (mbd) of oil if it is indeed… a Net Oil Exporter?? Good question. And, the answer to that question is hidden in the details, or as they say, “The devil is in the details.”
According to the EIA, the U.S. Energy Information Agency, the U.S. first became a net oil exporter during the week of Nov 30th, 2018 by exporting 211,000 barrels per day more than it imported. Please understand the figures below also include petroleum products:
The graph shows the data as negative because it is presented as “net oil imports.” Thus, a negative number means the U.S. is exporting more than it imports. I have changed my figures in the chart to represent “net oil exports.” As we can see, the U.S. had an even higher amount of net oil exports this past week at 675,000 barrels per day. Regardless, the U.S. has been a net exporter for three weeks out of the past seven months. However, if we look into the details of this data, we will find out that the United States isn’t exporting this oil and petroleum because it “WANTS” to, but because it’s “FORCED” to. There’s a big difference.
NOTE: The charts in this article come directly from the U.S. Energy Information Agency website, with my added annotations.
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