Anyone looking for signs that a recovery is underway for oil producers should start by directing attention to refinery utilization, given rising demand for certain barrels will lift the industry from its latest slump.

“That should be a sign that they’re able to sell products,” Bernadette Johnson, vice president of market intelligence for Enverus, said on a recent webinar. Her words, however, came with a caveat. “My team believes that we’re probably more at risk of a double dip in refinery utilization because they’re reacting a little bit too soon, and so I would say keep an eye on that one.”

Already between 20-25 MMbbl/d or so in global demand has gone offline, by Enverus’ estimates, as the worldwide COVID-19 pandemic led to stay-at-home orders. Travel restrictions, which drastically reduced the need for transportation fuels, are beginning to be lifted as oil producers shut in wells and lower production to bring supply more in line with demand. Oil prices have improved, but the rise might be short-lived.

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