Analysis: US crude stocks see largest-ever build amid record-low product demand

New York — US crude inventories surged higher last week as refiner demand plummeted in the face of an historic slowdown in refined product demand, US Energy Information Administration data showed Wednesday.

US commercial crude inventories surged 19.25 million barrels to 503.62 million barrels during the week ended April 10, EIA data showed. The build was the largest ever on record, eclipsing the previous record-build of 15.18 million barrels realized the week prior.

Nationwide crude inventories now stand at 6.2% above the five-year average, EIA said.

Crude inventories at Cushing, Oklahoma, the delivery point of the NYMEX light crude contract, climbed 5.72 million barrels to 54.97 million barrels, erasing a deficit to the five-year average that had persisted since November. The pipeline crossroads has some of the lowest-cost storage in the world, and is expected to be one of the first places to reach tank tops as crude supply overwhelms demand during April, according to S&P Global Platts Analytics.

The build pushed Cushing tanks to nearly 70% of total capacity, while nationwide crude storages are now approximately 57.4% full, according to a Platts analysis.

The crude build was due in large part to a steep decline in refinery demand last week. Operators have slashed run rates and idled units in response to a collapsed in refined product demand driven by widespread stay-at-home orders that have kept drivers off the road and contributed to a broad slowdown in US economic activity.

Total product supplied for all refined products fell to a fresh all-time low 13.80 million b/d, sliding 650,000 b/d from the week prior. Demand for jet fuel plunged 39% week-on-week to a record low 460,000 b/d, while distillate demand fell 28% to 2.76 million b/d - a 21-year low. Gasoline demand, which fell to a record low 5.07 million b/d during the week ended April 3, showed signs of stabilizing last week and edged up 20,000 b/d to 5.08 million b/d.

Nationwide gasoline stocks climbed 4.91 million barrels to a record high 262.22 million barrels, while distillate inventories surged 6.28 million barrels to 129.00 million barrels.

Refinery net crude inputs plunged 970,000 b/d to 12.67 million b/d amid a 6.5 percentage point drop in nationwide utilization rates to 69.1% of capacity. Net inputs were last lower in late September 2008, in the aftermath of Hurricane Ike's landfall on the Texas coast earlier that month.

Refinery utilization fell to record lows in the Midwest, Rockies and West Coast regions, at 65.3%, 63.3% and 65.1% capacity, respectively. On the US Atlantic Coast utilization fell to 39.6% of capacity, just 0.6 percentage point off the record low 39% seen in April 2011.

US Gulf Coast refinery utilization dipped 6 percentage points on the week, but was still relatively strong at 75.9% of capacity.

PRODUCT EXPORTS SURGE

Exports of refined products hit record high 6.35 million b/d last week, driven mainly by a surge in distillate and LPG exports.

Propane and propylene exports jumped 680,000 b/d to record high 1.71 million b/d, propelled by strong LPG demand in Asia and Latin America.

In Brazil, LPG demand has remained resilient amid COVID-19 lockdowns as consumers stock up on 13-kilogram tanks used to power cooking stoves in remote and rural regions of the country not served by traditional natural gas distribution networks.

Brazil's state-owned oil company Petrobras plans to import about 350,000 mt of LPG in April, enough to fill 27.4 million 13-kg tanks, the company said.

US LPG arrivals to Asia in May are estimated at around 2 million mt, steady from April.