US crude stocks see largest-ever weekly gain as refinery demand plunges

New York — US crude inventories saw their largest-ever weekly build last week as refinery demand cratered amid a historic collapse in product demand, US Energy Information Administration data showed Wednesday.

Commercial crude stocks surged 15.18 million barrels to 484.37 million barrels during the week ended April 3, EIA said, putting inventories more than 2% above the five-year average for this time of year.

The bulk of the build was at Cushing, Oklahoma, the delivery point of the NYMEX crude contract, where stocks climbed 6.42 million barrels to 49.24 million barrels. The build was the largest-ever on record at Cushing, and put tank levels there at an estimated 62% of working capacity, an S&P Global Platts analysis showed.

US Gulf Coast crude inventories jumped 5.34 million barrels to 253.12 million barrels as exports fell to their weakest since November at 2.83 million b/d.

While last week's build was the largest ever on record, it was in part tempered by a 600,000 b/d decline in US crude production. Total output averaged 12.4 million b/d last week, the weakest since September.

Refinery net crude inputs were down 1.26 million b/d last week at 13.63 million b/d as utilization rates plunged 6.7 percentage points to 75.6% of capacity. Total net crude inputs were the lowest since February 2011, and refinery utilization was last weaker in late September 2008.

The weakened refinery utilization comes as refiners have cut rates due to weakening demand amid the coronavirus outbreak.

S&P Global Platts Analytics expects 2.25 million b/d of US run cuts will occur in early April as the spread of the COVID-19 pandemic continues to hammer refined product demand. US oil product demand fell 3.4 million b/d last week to 14.45 million b/d - the lowest level on record dating back to November 1990.

The run cuts pulled gasoline cracks back above zero last week, with the ICE New York Harbor RBOB crack against Brent averaging at around 70 cents/b, compared to minus $2.86/b the week prior. Notably, this crack has averaged at around minus $1.40/b so far this week.

Midwest refiners have been especially hard hit by a lack of export capacity.

Midwest cracking margins for WTI ex-Cushing averaged minus $6.19/b for the week ended April 3, compared with the minus 82 cents/b the week earlier. The Midwest refinery utilization rate plunged 7.2 percentage points last week to 74.2% of capacity, an 18-month low.

Gasoline stocks surge as pandemic response craters demand

Nationwide gasoline inventories surged 1.5 million barrels to 257.3 million barrels, putting them more than 9% above the five-year average. On the high-demand USAC, stocks were more than 11% above average after jumping 4.58 million barrels to a 14-month high 70.5 million barrels.

Government stay-at-home orders, aimed at slowing the nationwide spread of the coronavirus, have kept the vast majority of non-essential workers at home, cratering gasoline demand. By the end of last week, at least 45 states had full or partial lockdowns in place, affecting at least 297 million citizens, according to media reports.

Gasoline demand averaged 5.07 million b/d last week, the lowest ever level on records dating back to February 1991 and down nearly 48% from mid-March, before the start of the lockdowns.

In contrast, the designation of most overland trucking, which represents around 70% of diesel consumption this time of year, as an "essential service" has so far left distillate demand largely unscathed by the ever-expanding lockdown orders. But distillate demand will eventually ease as a results of a broader economic slowdown stemming from the lockdowns, according to Platts Analytics.

Distillate stocks increased 480,000 barrels last week to 122.72 million barrels, EIA reported.