The COVID-19 pandemic is having an unprecedented impact on demand for oil and petroleum products.
Last week’s Petroleum Status Report from the Energy Information Administration shows just how dramatic the impact has been on U.S. gasoline demand. For the week that ended 4/03/20, gasoline demand fell to 5.065 million barrels per day (BPD).
That number represents a 48% decline in gasoline demand versus the same period a year ago, and is down 24% since last week. In fact, it’s the lowest demand number reported since January 1969 — a span of more than 50 years.
When other petroleum products are included demand is still dropping, albeit not quite as sharply. In the same report, total demand for petroleum products was 14.446 million BPD, versus the year-ago demand number of 20.316 million BPD — a decline of 29%. Two categories of petroleum products — distillate fuel oil and propane — were actually slightly higher than they were a year ago.
This drop in demand is finally starting to impact the production numbers. U.S. oil production last week fell to 12.4 million BPD versus 13.0 million BPD a week earlier.
But that number is likely to fall further, as an agreement between Russia and OPEC to cut global production by 10 million BPD counts on the U.S. and Canada to shoulder about half of that burden. It remains unclear how the U.S. could even legally coordinate such cuts.