Last updateMon, 01 Mar 2021 7pm

U.S. Petroleum Exceeds All Expectations in January

According to the American Petroleum Institute's latest monthly statistical report, U.S. oil markets kicked off 2021 with a remarkable January. Total U.S. petroleum demand returned to within 1.2% of its level from January 2020 despite the pandemic. Refining and petrochemical demand for other oils – naphtha, gasoil, propane/propylene – reached a record high level (6.5 million barrels per day, mb/d), 33.1% share of total U.S. petroleum demand. 

Extreme Cold Expected to Impact U.S. Shale Drillers

“While natural gas producers benefited from cold weather forcing closure of wells, shale oil drillers stood on the losing side of the trade as frozen pipes and power supply interruptions were expected to slow an output recovery, operators said.”

Analysts tell Reuters that “[s]hale oil producers could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output lost during the cold snap and some production may never return because of the cost of restarting marginal wells.” 

U.S. Specialty Chemical Markets Expand in December

U.S. specialty chemicals market volumes expanded by 1.2% in December following an upwardly revised 0.6% gain in November, according to the American Chemistry Council. Of the 28 specialty chemical segments monitored, 23 expanded in December, up from 13 in November, while one segment was stable and four declined. On a sequential basis, diffusion was 84% in December, up from 48% in November. Of the 23 segments that expanded in December, 19 featured gains of 1.0% or more.

During December, overall specialty chemicals volumes were off 4.9% on a year-over-year basis, an improvement from November. Volumes stood at 106.9% of their average 2012 levels in December. This is equivalent to 7.28 billion pounds (3.30 million metric tons). On a year-earlier basis, six chemical segments showed gains: Cosmetic additives, dyes, electronic chemicals, flavors and fragrances, plastic compounding, and water management chemicals. On a year-earlier basis, diffusion was 18% in December. For 2020 as a whole, volumes were off 7.1%. 

Texas Power Grid Overmatched by Severe Winter Weather

“Millions of Texans were without heat and electricity Monday as snow, ice and frigid temperatures caused a catastrophic failure of the state’s power grid,” The Houston Chronicle reports.

“The Texas power grid, powered largely by wind and natural gas, is relatively well equipped to handle the state’s hot and humid summers when demand for power soars. But unlike blistering summers, the severe winter weather delivered a crippling blow to power production, cutting supplies as the falling temperatures increased demand.” 

U.S. Petroleum Imports to Increase Dramatically by 2022

Throughout much of its history, the U.S. has imported more petroleum (which includes crude oil, refined petroleum products, and other liquids) than it has exported. That status changed in 2020. The U.S. Energy Information Administration’s (EIA) February 2021 Short-Term Energy Outlook estimates that 2020 marked the first year that the United States exported more petroleum than it imported on an annual basis. However, largely because of declines in domestic crude oil production and corresponding increases in crude oil imports, EIA expects the U.S. to return to being a net petroleum importer on an annual basis in both 2021 and 2022.  

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