API: US petroleum demand in September slowed from August
With seasonal slowing after the summer driving season, US petroleum demand was 20.1 million b/d in September, down 3.5% from August but up 2.4% compared with September 2017. This is according the latest monthly statistics report from the US American Petroleum Institute.
Year-to-date through September, US petroleum demand remained at its strongest since 2007, averaging 20.4 million b/d. This was an increase of nearly 500,000 b/d over the same period in 2017.
US gasoline demand
Total motor gasoline deliveries were 9.3 million b/d in September, which was a decrease of 4.4% from August and 1.4% from September 2017. Although crude oil price rose, with lower demand, the average price of regular-grade gasoline in September held steady at $2.92/gal in September.
In September, demand for reformulated gasoline, consumed primarily in urban areas, increased 3.8% year over year to 3.1 million b/d, while conventional gasoline, used more in rural areas, decreased 3.7% year over year to 6.2 million b/d.
Distillate fuel oil demand
In September, distillate deliveries of 4 million b/d decreased 2.7% from August but remained up 1.4% compared with September 2017. Through the first 9 months of the year, distillate demand was at its highest since 2007.
About 97% of distillate demand in September was for ultralow-sulfur distillate (ULSD), driven by road freight transportation activity. The US Bureau of Labor Statistics’ Producer Price Index for freight trucking increased by 7.8% year over year in September but slowed for the third consecutive month.
The remaining 3% of distillate demand was high-sulfur distillate fuel (HSD). In September, HSD deliveries decreased 31.1% from August and 35.4% compared with September 2017. This was a decrease from unseasonal strong demand in August, and monthly changes in HSD demand have been volatile this year.
Jet fuel, fuel oil demand
Jet fuel demand growth has remained solid. In September, kerosene jet fuel deliveries of 1.7 million b/d increased by 3.7% compared with September 2017. This was the second-strongest September monthly demand on record and highest since 2000.
The International Air Transport Association (IATA) reported that US domestic air passenger kilometers increased by 5.2% in August compared with August 2017. The pace of annual growth slowed in recent months, but the IATA attributed it to “developments a year ago rather than any change in the current healthy trend.”
Residual fuel oil was 348,000 b/d in September, an increase of 5.1% from August and 15.2% above September 2017, driven by accelerated marine shipping activity. As Zvi Schreiber, Freightos chief executive officer, noted, “As the China-US tariff war ratcheted up, many US importers stocked up in advance of the high-turnover Thanksgiving and Christmas season.”
US oil production
US crude oil production increased to a record 11 million b/d in September, up by 63,000 b/d from August. The rising production has been consistent with Baker Hughes’ reported increases in US oil drilling activity, which increased to an average of 863 oil-targeted rigs in this year’s third quarter from 843 in the second quarter.
Natural gas liquids production held steady near record levels with 4.3 million b/d in September, the same as in August and down 100,0000 b/d from July. Through the first three quarters of the year, NGL production has been the highest on record.
International trade
Last month API highlighted US petroleum exports decreased 1.3 million b/d between June and August. Census data confirm shifts by US trading partners, especially China which purchased $1 billion of US petroleum in June but none in August. Decreases were also evident (in percent of value) for Brazil (56%), India (19%), Italy (54%), Netherlands (60%), and Singapore (30%).
After China and Canada, India has been the next largest market for US petroleum exports. However, India’s oil minister reaffirmed the country will continue to import Iranian crude despite current sanctions. Jainam Shah of Pandit Deendayal Petroleum University additionally explained many Indian refineries are geared to take Iranian crude, and thanks to favorable credit terms and sale on a Cost Insurance and Freight (CIF) basis, where Iran pays costs for freight and insurance of crude delivered to India, India effectively receives a discount of about $2.50/bbl that makes Iranian crude oil hard for Indian refiners to replace.
“Global oil markets have tended to be resilient, however, so we expected the US would find alternative buyers, perhaps at discounted prices. Subsequently, the price difference between Brent and WTI crude oil nearly doubled to $8.66/bbl between August and September, and US petroleum exports of 7.4 million b/d rose by 900,000 b/d from August, the largest monthly increase on record.” API said.
Refinery, inventories
Refinery gross inputs decreased by 500,000 b/d between August and September due to normal seasonality and scheduled maintenance turnarounds. However, US refineries still set a record for the month of September with gross inputs of 17.4 million b/d and ran at their second highest percent of capacity operated (93.7%) for the month. Through the first three quarters of the year, refinery throughput of 17.9 million b/d is the highest on record.
Total petroleum inventories in September remained steady and in the middle of the 5-year range at 1.21 billion bbl. With increased monthly crude oil production coupled with slowed refinery throughput between August and September, crude oil inventories increased 0.4% month-over-month but remained down 13.7% compared with September 2017.
