As a result of the COVID-19 pandemic, governments around the world, including Canada, have put restrictions in place so that people remain at home as much as possible. These restrictions have resulted in unprecedented reduction in global demand for refined petroleum products (RPPs), particularly those used in transportation, such as gasoline, diesel, and jet fuel.
In response, refineries around the world, including in Canada and the United States (U.S.), are processing much less crude oil; the feedstock required to produce RPPs such as gasoline, diesel, and jet fuel. The IEA estimates that global oil demand will be reduced by about 29 million barrels per day (MMb/d) in April, or about 30 per cent year-over-year, to a level not seen since 1995. (Figure 1)
Utilization rates of Canadian refineries have dropped by more than 30 per cent since the beginning of March, and by over 35 per cent since the beginning of the year. Some refineries have reduced operations while others have completely shut down operations until demand improves. For example, Newfoundland and Labrador’s Come by Chance Refinery, which normally consumes 130 thousand barrels per day of crude oil, stopped operating in April.
Canadian refineries have capacity to process over 1.9 MMb/d of crude oil. COVID-19 has resulted in refineries processing just below 1.1 MMb/d of crude oil for the week ending 14 April 2020 (Figure 2). Prior to the COVID-19 pandemic, the lowest Canadian weekly crude run volumes over the past five years was 1.14 MMb/d in April 2018.
Decreasing refinery utilization in Canada is similar to what is happening globally. Refinery utilization in the U.S. has declined by 22% since 1 March 2020 and by more than 25% since the beginning of the year. IEA forecasts that global refining crude intake will decline by 16 MMb/d in the second quarter of 2020 alone.