US demand for gasoline continues on an overall increasing trend. There are concerns about a potential slowdown in mobility due to measures controlling ongoing Covid-19 outbreaks in different US states. However it is still too soon to find out whether these setbacks will reverse gasoline demand. As for distillate and kerosene-jet fuel these products still remain depressed in their demand.
Refineries are also gradually increasing their crude oil intake although at a lower rate than the average increase of supplied refined products, in particular gasoline. This can be beneficial for lowering the stocked volume of products and eventually the crude oil input required from refineries could increase from the current 78% utilization capacity to a more normal utilization of around 85%.
Domestic crude oil production continues to show an overall slight decline on a weekly basis but the largest cuts appear to be over. In fact the production forecast for the remaining months of 2020 remains relatively flat at around 11 million barrels per day (mmbd). About 29% of the current crude oil reduction of approximately 2mmbd came from cuts in the Permian Basin, followed by the Eagle Ford play with a 20% share.
Since May, crude oil inventories have also kept their decreasing trend through lower injections and even a few large withdrawals. There is now a lower risk in reaching the limit in storage working capacity in Cushing, OK, and this has supported the clear upward trend of WTI price during the last two and a half months.
As the system has already suppressed the excess of supply, there is now more sensitivity to the changes in imported volumes of crude. Imports of crude first decreased from mid-March but have reversed trend and have actually increased since mid-May to date. As refiners also gradually increase their crude intake and with no increase in domestic production, stored crude oil could experience more of relatively large withdrawals during the second half of the year.