Last updateFri, 05 Jun 2020 3pm

Chemical Activity Barometer Sinks in April

The Chemical Activity Barometer (CAB) from the American Chemistry Council (ACC), fell 5.5% in April on a three-month moving average basis following a downwardly revised 2.9% decline in March. On a year-over-year basis, the barometer fell 7.3% in April.

The unadjusted data shows a 6.7% decline in April following an 8.9% decline in March and a 1.0% decline in February. The diffusion index slumped from 47% to 35% in April. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for March was revised downward by 1.04 points and that for February was revised upward by 0.07 points.

“The latest CAB reading is consistent with a recession,” said Kevin Swift, chief economist at ACC. “The declines of April and March are the most pronounced, pervasive and persistent in the post-World War II period.”

U.S. Ethanol Exports Fell for First Time in Four Years

The U.S. exported 96,000 barrels per day (b/d) of fuel ethanol in 2019, the first annual drop in U.S. ethanol exports since 2015. Despite the decrease, total exports remained at the second-highest level on record. The U.S. exported more fuel ethanol than it imported in 2019, the 10th year in a row as a net exporter.

U.S. fuel ethanol exports fell by 14% in 2019 even though the number of export destinations increased from 34 destinations in 2018 to 39 destinations in 2019. Nearly half of all ethanol was shipped to Brazil and Canada, despite these countries decreasing their imports of U.S. ethanol by 34% and 5%, respectively.

Gas, LNG Sectors See Volatility in Their Future

“The future for gas and LNG is highly uncertain, particularly as new supply continues to come online in a market that may struggle to absorb it,” Petroleum Economist reports.

“Economic growth is becoming an increasingly important proxy for greater gas usage globally. Industrial sector demand–including gas as a feedstock for petrochemicals and fertilizers–has increased in significance as a growth driver relative to gas consumption for power generation. And there is now a huge question mark around economic growth moving forward due to the coronavirus pandemic.”

U.S. Oil Output Curbs to Triple in May, June

The global imbalance between oil supply and demand, which has built to 26.4 million barrels per day (bpd) in April due to the COVID-19 pandemic, is set to halve to 13.6 million bpd in May and fall further to just 6.1 million bpd, according to a Rystad Energy analysis. However, despite the improvement, the stock build will still overwhelm remaining global storage, which will fill in weeks.

Global supply is expected to fall in May to 92.8 million bpd, from 98.3 million bpd in April, and further decline to 91.1 million bpd in June. We expect June to see the lowest supply level this year unless further production cuts are announced, with output rebounding from July.

Demand on the other hand, which Rystad Energy estimates will reach its lowest point at 71.8 million bpd in April, will rise to 79.2 million bpd in May and to 85.1 million bpd in June, as governments ease COVID-19-related restrictions and some industrial activity resumes.

API Report Shows Impact of COVID-19 on Energy Markets

U.S. petroleum demand declined to 19.4 million barrels per day (mb/d) in March, which was a 4.6% decrease from February, according to data released from the American Petroleum Institute’s March 2020 Monthly Statistical Report, which is based on surveys of 90% of the industry. Measures to slow the spread of the coronavirus drove gasoline and jet fuel demand lower, but were partially offset by higher diesel fuel deliveries with increased freight transportation.

"Current data through March, based on API’s surveys of the industry, highlight the deep energy market effects of the ongoing public health crisis, but also provide timely and statistically valid estimates in a period of tremendous uncertainty," API chief economist Dean Foreman said. "As demand decelerated over the latter half of the month, total U.S. petroleum demand decreased by 934,000 barrels per day, which is a large decease but provides a relatively stronger point of departure than many third-parties have projected. Importantly, we saw a monthly downturn in U.S. crude oil production, which shows the market is responding appropriately. Our primary focus now should be on addressing this virus, so that we can restore public health and the economy, with energy as a key enabler."

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