The aftershocks of Hurricane Ida kept a lid on petroleum output and demand last week, long after the storm hammered Louisiana and production facilities in the Gulf of Mexico (GOM) on Aug. 29, the latest U.S. Energy Information Administration (EIA) inventory report showed.
For the week ended Sept. 10, production inched ahead to 10.1 million b/d from 10.0 million b/d the week before, according to EIA’s Weekly Petroleum Status Report. Output had plummeted in the week ended Sept. 3, dropping from 11.5 million b/d pre-Ida. The storm knocked offline more than three-fourths of oil output in the GOM, with the recovery still ongoing.
Prior to Ida, output was already more than 1.0 million b/d below the 2020 peak reached last March before the coronavirus pandemic.
Ida’s impact “remains considerable,” analysts at ClearView Energy Partners LLC said on Wednesday.
Demand, meanwhile, remained subdued relative to the robust levels reported through most of the summer. Overall petroleum demand for the Sept. 10 week declined 0.2%. While a modest week/week change, it essentially held even with the depressed levels of the Sept. 3 week, when demand dropped 13% due to Ida-imposed flooding and damage that limited refinery activity in the GOM.
U.S. crude refinery inputs averaged 14.4 million b/d last week, up from 14.3 million b/d the prior week but still down 1.5 million from pre-Ida levels. Refineries operated at 82.1% of their capacity last week, up slightly from 81.9% the prior week but down from more than 90% in August.
Outside of the GOM, however, demand has generally held strong, as more Americans get vaccinated against the coronavirus and travel increases.
Total products supplied – EIA’s terminology for demand – increased notably over the last four-week period and averaged 21.1 million b/d. That was up by 17% from the same period last year. Over the same stretch, motor gasoline consumption averaged 9.4 million b/d, up 8%, and distillate fuel demand averaged 4.0 million b/d, up 11%. Jet fuel product supplied jumped 60% to more than 1.5 million b/d.
With demand steady in recent months, crude inventories are falling. Oil inventories last week, excluding those in the Strategic Petroleum Reserve, decreased by 6.4 million bbl from the previous week. At 417.4 million bbl, inventories are about 7% below the five-year average, EIA said.
Globally, oil demand in 2021 is also well above the depressed levels of last year, though the recovery has proven choppy.
Demand across the globe rose substantially last spring as vaccines were rolled out and economic activity accelerated. Momentum slowed over the summer, however, as the coronavirus Delta variant drove up infection rates and galvanized new travel restrictions in parts of the world, including heavily populated Asia.
In the wake of the Delta variant, the International Energy Agency (IEA) said this week that it revised down its full-year 2021 demand growth estimate. It now expects global oil demand to rise by 5.2 million b/d this year, down by 110,000 b/d from an August forecast.
Also this week, the Organization of the Petroleum Exporting Countries (OPEC) provided its latest estimate. Its outlook for global oil demand growth in 2021 remained unchanged from last month’s assessment at 6.0 million b/d.
Worldwide demand in 3Q2021 “has proved to be resilient, supported by rising mobility and traveling activities,” particularly in the United States and other developed economies, OPEC researchers said. “At the same time, the increased risk of Covid-19 cases, primarily fueled by the Delta variant, is clouding oil demand prospects going into the final quarter of the year.”
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