MSR: U.S. Petroleum Markets, Economy Continue to Recover

Dean Foreman
Posted April 15, 2021

API’s primary data for March 2021 suggest that petroleum markets demonstrated a measured recovery following the winter emergency disruptions that affected oil supply, trade and inventories beginning in mid-February.

Notably, total U.S. petroleum demand of 19.1 million barrels per day (mb/d) decreased seasonally but showed resounding strength in rural gasoline demand that increased by 632,000 barrels per day over February. 

Refining and petrochemical demand for “other oils” – that is, naphtha, gasoil, propane/propylene – remained solid and represented 27.3% of total U.S. petroleum demand in March.  Although the demand for other oils had experienced a seasonal boost due to winter heating needs, the demand for propylene and medical plastics through the COVID-19 pandemic has remained strong.

With relatively solid demand, coupled with the resumption of refining activities following disruptions that took more than 3.8 mb/d of U.S. refinery capacity offline during the last week of February, per Bloomberg, U.S. refining throughput recovered to 14.5 mb/d.  This was an increase of 8.1% from February. This activity level improved despite the fact that 1.9 mb/d of crude distillation and coker unit capacity remained offline throughout March.

With some continued disruptions to refining activities, crude oil inventories rose and refined product inventories fell in March, while net U.S. petroleum inventories were nearly unchanged.

Due to a combination of less trade and lower domestic production compared to pre-COVID levels, the United States has returned to being a petroleum net importer.  Recall that in 2020 the U.S. celebrated becoming a petroleum net exporter on an annual basis for the first time since 1958. However, this reversed in February and continued in March as the rise of imports exceeded that of exports.

A silver lining to the higher pull for foreign petroleum was that it showed the U.S. economy is very much alive and kicking. Leading economic indicators improved broadly in March, including API’s Distillate Economic Indicator^™ that signaled continued industrial production and broad economic gains.

For details and analysis, please see the latest MSR as available at no cost on the chief economist’s section of API’s website, linked here.