First came the largest and fastest oil demand collapse in history. Now the largest oil production cut ever is unfolding at light speed and nowhere is production being cut as much as in North America, specifically the U.S. The U.S. crude oil system appeared to be confronted with a significant supply and demand mismatch and the possibility of limited storage, and if crude oil storage is not available, then production will halt. The rate at which the U.S. production cuts occurred over the past month, and lower refined product demand, has alleviated the possibility of a crude oil storage containment issue. As U.S. and global crude oil supply has rebalanced to a lower level of demand, signs point to April as being the bottom of the crude oil demand collapse. This situation sets the stage for the possibility of crude oil supply deficits in second half 2020, assuming Saudi Arabia and Russia do not surge production. The nascent crude oil market demand recovery is still vulnerable to concerns about the rate at which people circulation recovers, the drawdown of inventories, the possibility of further COVID-19 outbreaks, and high levels of unemployment. The U.S. crude oil production cuts have impacted the outlook and forecast for U.S. propane production and inventory levels.
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