US implied fuel demand drops: Update

Adds detail on days of supply, run rates.

US implied gasoline demand last week sank by the largest weekly volume since September in the first glimpse through federal data at how the nation's response to the coronavirus pandemic will affect fuel supply and demand.

Implied gasoline consumption fell in the week ended 20 March by 8.9pc to 8.8mn b/d, the lowest level since February and 3.2pc lower than the same week last year, according to the Energy Information Administration (EIA). Gasoline stockpiles fell by 1.5mn bl — 0.6pc — to 239.3mn bl, largely on draws from US Atlantic coast inventories in the region that includes New York, New Jersey and Pennsylvania.

US diesel consumption fell by an estimated 5.4pc to 3.8mn b/d, 11pc lower than the same week last year. National ultra-low sulfur diesel (ULSD) stockpiles fell by 1.7pc to 110.3mn bl, an unseasonably large draw for the period. Stockpiles have fallen by an average 363,000 bl during the week over the past five years.

The weekly data does not reflect some of the worst demand cuts that refineries, fuel marketers and analysts expect or have already seen in various parts of the country. State and locally-directed efforts to mitigate the coronavirus pandemic by restricting gatherings and travel began only last week in California, the largest US state by population and second-largest gasoline market.

Implied US demand rose by 2.6pc to 9.7mn b/d in the previous week — 2.8pc higher than the five-year average — as multiple state retail organizations described limited panic-buying and ongoing tourism ahead of civic shutdowns.

US refiner and wholesale fuel marketer Phillips 66 said yesterday that gasoline demand had fallen by roughly 20pc, and by 30pc in the west coast. Distributors have warned that falling US gasoline demand will require environmental waivers to clear out winter-grade gasoline from storage tanks well into the summer driving season.

But there was little sign of unusually high volumes in the latest data. US west coast gasoline stockpiles reported the only build of any region last week, higher by 3pc to 30.9mn bl. Total US Atlantic coast gasoline inventories fell by 2pc to 60.8mn bl, their lowest level since November 2019. Conventional blendstocks in storage there increased by 5pc to 22.3mn bl, the largest increase in more than two months. Total stockpiles of that fuel remained lower by 10pc compared to the same week last year. The US had 25.8 days of gasoline supply, slightly below the five-year average for the week.

Phillips 66 reported diesel demand was more stable as the US continued to rely on its shipping and logistics infrastructure. Total US Gulf coast diesel inventories increased by 3.3pc to 42.4mn bl, and ULSD stockpiles there increased by less than 1pc, or 230,000 bl, to 34.7mn bl.

US Atlantic coast diesel inventories led the draw, with ULSD stockpiles lower by 5.5pc to 30.8mn bl. It was the region's lowest diesel stockpile level since late October. Inventories in the southeastern US fell by 16pc to 9.8mn bl, or 17pc lower than the five-year average for the week. The US reported 30.9 days of national diesel supplies, roughly flat to year-ago levels though 12.7pc lower than the five-year average for the week.

Fuel consumption and associated inventories will determine refinery crude processing as local efforts to limit the virus intensify. Crude throughputs were flat last week, at 15.8mn b/d, roughly even to the same week last year. Refinery rates rose in the Atlantic and west coasts and in the midcontinent, but were offset by a 1.5pc drop to 8.7mn b/d in the US Gulf coast.

By Elliott Blackburn