FUELSNews 360°

Q4 2020 Report

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.

For many, 2020 was a year of total upheaval and chaos. That description is fitting for oil markets as well, though 2020 brought more than just chaos. It also demonstrated the remarkable resilience of the petroleum supply chain, from production to refining to distribution. Thousands of producers and marketers faced difficult choices, and the outcome showed both restraint and a commitment to maintaining balance.
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.

We hope you enjoy this quarter’s issue of FUELSNews 360°. Please feel free to email us at fuelsnews@mansfieldoil.com with feedback, questions, or simply to request additional copies.

We hope you enjoy this quarter’s issue of FUELSNews 360°. If you have any questions, or would like to request additional copies, email us at fuelsnews@mansfieldoil.com.

FUELSNews 360°, published four times a year by Mansfield Energy, analyzes and summarizes the prior quarter’s activity in the oil, natural gas, renewables and refined products industries. FUELSNews 360° provides our customers with industry market data and trends both domestically and globally and delivers some insight into upcoming challenges facing the energy supply chain.