FUELSNews 360° – Executive Summary
Many complex and historic 2020 trends were wrapped up in Q4, providing confidence to oil markets heading into the new year.
From aluminum cans to semiconductors, many industries experienced shortages during the COVID downturn as consumer behavior changed. Yet the petroleum industry came through for customers, fueling the US economy.
In many ways, Q4 was the perfect ending to an abnormal year. After months of a raging pandemic, a vaccine was approved with over 95% efficacy. Months of political strife culminated in the November election, bringing uncertainty and allegations of fraud. The OPEC+ alliance extended its production agreement into 2021, ensuring balance for global oil markets. Many complex and historic 2020 trends were wrapped up in Q4, providing confidence to oil markets heading into the new year.
Along with added certainty came a strong rally for oil markets as the year came to an end. Vaccine announcements spurred a multi-week rally that pushed WTI crude from $42 to $48 by late December.
Although demand was suppressed throughout the year, Q4 brought a glimmer of hope that consumption may eventually return to historical levels. In Q4, global demand grew by 2 MMbpd over the previous quarter, and experts anticipate 2021 will see even more growth. Economic recovery helped drive rising consumption, with the world bouncing back much more quickly than anticipated months ago. Read why the economy recovered so quickly on page 13.
Looking ahead, there remain many variables that may affect fuel prices in 2021. The world faces a new US political administration, vaccine deployments, OPEC+ supply decisions, and many more factors that could propel prices in one way or another. Mansfield’s supply team wades through these issues and provides forecasts on the future. Turn to page 40 to read more.
In regional markets, refinery outages and utilization dominated headlines. Around the country, refiners struggled to balance rising crude oil prices and suppressed fuel prices. Some refiners took production offline for maintenance, some pulled back due to market forces, and others were forced to shut down entirely.
Regional inventories showed a wide divergence in trends. Along the East Coast and Gulf Coast, diesel inventories remained more than 30% above five-year seasonal averages. In the Midwest, however, diesel stocks fell 5% below historical levels. Gasoline stocks were much closer to standard levels, with inventories ranging from 1-10% above their local average. Read about regional inventories and refinery trends on pages 16–22.
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