Reduced economic activity resulting from shelter-in-place restrictions due to COVID-19 drove significant near-term disruptions to energy markets in the month of April with US petroleum demand falling nearly 27% to 14.2 million bpd, according to data released in the American Petroleum Institute’s April 2020 Monthly Statistical Report (MSR). Gasoline deliveries fell more than 31% in April to their lowest level since 1972, while jet fuel posted its largest monthly decline on record, falling nearly 56% to 0.6 million bpd. On a weekly basis, total US petroleum demand rebounded by 1.6 million bpd as of 1 May after appearing to bottom out during the second week of April.
“April was widely expected to reflect the weakest oil market data yet – and may be a low point that is reflected on for decades to come,” API Chief Economist Dean Foreman said. “Significant uncertainty remains over the state of oil markets in the weeks ahead, but the realignment of the supply and demand balance coupled with the gradual reopening of state economies leads us to be cautiously optimistic that the worst may be behind us.”
On the supply side, US oil-targeted drilling fell a record 52% over the past two months as producers adjusted output to align with this historic decline in demand. Domestic oil production fell 0.9 million bpd in April to 12.0 million bpd, which combined with reductions in natural gas and other liquids output, amounted to the largest monthly decline in US total liquids supply on record.
“The industry’s operational flexibility has enabled producers to adjust output and mitigate against this swift and sudden decline in demand,” Foreman said. “While the challenges we face today are historic and unprecedented in nature, we remain confident that the US natural gas and oil industry can emerge stronger, more resilient, and well-positioned to meet the world’s long-term needs for affordable, reliable and ever-cleaner energy resources.”
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