API: US petroleum demand in August reached 20.8 million b/d
According the latest monthly statistics report from the American Petroleum Institute, US petroleum demand in August, led by motor gasoline, distillate, and refinery feedstocks, increased to 20.8 million b/d, up 250,000 b/d from July. This was the strongest demand for any month since August 2007 and reflected solid economic growth, industrial activity, and consumer confidence, API said.
Year-to-date through August, petroleum demand averaged 20.3 million b/d. This was an increase of nearly 500,000 b/d over the first 8 months of 2017.
US gasoline, distillate fuel
Consumer gasoline demand, as measured by total motor gasoline deliveries, was 9.7 million b/d in August. This was 0.8% below that of August 2017 but the third-highest demand for the month of August on record since 1945.
“The two highest years were 2016 and 2017, which suggests the increase in crude oil and gasoline prices this year may have suppressed some demand growth despite the strong economy,” API said.
The average price of regular-grade gasoline was $2.91/gal in August, which was down by 1.4¢/gal from July, but up by 42¢/gal compared with August 2017 and 63¢/gal vs. August 2016.
In August, distillate deliveries of 4.1 million b/d increased by 3.4% from July and 2% from August 2017. This was the highest distillate demand since 2007, both for the month of August and cumulatively through the first 8 months of the year.
About 96% of distillate demand in August was for ultralow-sulfur distillate (ULSD), which is driven by road freight transportation activity. The US Bureau of Labor Statistics’ Producer Price Index for freight trucking increased 8.4% year-over-year in August at the same time as discussion has increased about America’s shortage of truck drivers.
The remaining demand was high-sulfur distillate fuel (HSD), which is a heating fuel in the residential and commercial sectors and a marine fuel when blended to upgrade heavy fuel oil. HSD deliveries of 151,000 b/d in August were up 64.1% vs. August 2017 as marine shipping activity for imports remained high to beat the imposition of import tariffs by the US.
Jet fuel, residual fuel oil
Kerosene jet fuel deliveries of 1.8 million b/d increased 3.6% in August compared with August 2017. This was the second-strongest demand on record for the month and third-highest for any month. Year-to-date through August, jet fuel demand is at its highest since 2001.
The International Air Transport Association (IATA) reported that US air passenger kilometers increased 5.6% compared with July 2017, and IATA’s World Air Transport Statistics highlighted that 2017 was a strong year in which the number of global air passenger exceeded 4 billion for the first time, which was attributed to broad-based improvement in global economic conditions and low airfares.
Residual fuel oil was 331,000 b/d in August, a decrease of 19.9% from July and 4.3% below August 2017. The spike in July and annual increase were consistent with the marine shipping-driven activity. Notably, the pattern of monthly changes so far this year has been the most volatile demand on record, which suggests residual fuel oil increasingly serves niche and cyclical markets, according to API.
US oil production, exports
US crude oil production increased to a record 10.8 million b/d in August, up by more than 100,000 b/d from July. According to Baker Hughes, US oil drilling activity increased to an average of 864 in August from 741 rigs and 846 rigs in first and second quarters of 2018, respectively.
Natural gas liquids production remained near its record production record with 4.3 million b/d in August, down 100,000 b/d from July but up from 3.8 million b/d in August 2017. This was the highest NGL production on record for the month of August.
US crude exports fell by 1.3 million b/d between June and August, including 560,000 b/d of crude oil and 730,000 b/d of refined products. At the same time, however, US petroleum imports, led by refined products, rose by more than 300,000 b/d.
According to API, the increased imports likely reflected strong refining and product demand, while the 1.3 million b/d decrease in exports appeared to highlight a shift in global petroleum buying patterns away from the US. The root cause should be more apparent when monthly data by country of destination become available in a few months.
US refineries set a record for August with gross inputs of 18 million b/d and ran at 96.8%—their second-highest percent of capacity operated for the month. Refinery outages reported by Bloomberg in August (270,000 b/d) fell from July and neared the best levels ever.
