We’ve never seen a collapse like this. US oil consumption in April fell off a cliff plumbing depths not reached since 1983. At the time, the US economy was coming off of a painful bout of inflation, and leaving behind years of economic recession. The numbers, according to new data from the US Energy Information Administration, is likely the nadir of US demand after the coronavirus virtually shut down large swaths of the country.
The drop occurred across nearly all types of oil use, from gasoline for cars to asphalt and lubricants. Petrochemicals, used for products like plastic bags and masks, were one of the only oil-based products to see a slight uptick.
We have yet to see this effect on supply in the official numbers. Global oil demand crashed by one-third in April. Yet suppliers could only do so much to adjust their immediate output. In the US, the crash backed up oil supplies through the system as storage tanks and refineries began to refuse new orders. In a historical first, benchmark crude prices for West Texas Intermediate dropped into negative territory on April 20 before recovering recently to around $40 per barrel.