US oil demand rose by 0.46 mb/d (2.4%) y/y to 19.62 mb/d in February, a 0.66 mb/d downward revision to the weekly data, compared with our projections for a 0.5 mb/d downward revision. Combined demand for the four main products fell by 26 thousand b/d y/y on weaker gasoline demand, while demand for ‘other oils’ rose by 0.49 mb/d.
US gasoline demand dropped by 0.17 mb/d y/y to 8.82 mb/d, mirroring the 0.1% y/y decline seen in February vehicle miles travelled (VMTs). PADDs 1 and 3 led the way, with demand down y/y by 0.11 mb/d and 0.20 mb/d respectively. However, demand was more robust elsewhere, with PADDs 2 and 5 logging growth of 40 thousand b/d and 97 thousand b/d respectively.
After an extremely strong print in January, US diesel demand growth softened to 57 thousand b/d y/y in February, leaving total demand at 3.96 mb/d. US economic activity continues to look very healthy, with a strong backdrop for the industrial and construction sectors supporting domestic diesel demand. Indeed, freight shipments have grown at double-digit y/y rates in each of the first three months of 2018, while industrial production growth hit its fastest annual pace since March 2011 in February (+4.4%).
US crude imports fell by 0.40 mb/d y/y to a five-month low of 7.49 mb/d in February. OPEC arrivals (-0.75 mb/d) led the decline, though US-bound loadings from Saudi Arabia picked up in February and March, which should raise arrivals in the coming months.
US crude exports rose to 1.61 mb/d in February, 0.26 mb/d higher m/m and 0.49 mb/d higher than in February 2017. Canada and China remained the largest individual takers of US crude in February, importing 0.40 mb/d and 0.38 mb/d respectively. However, the largest y/y gains continued to come from transatlantic flows into Europe and the Mediterranean, up by 0.28 mb/d to a combined 0.47 mb/d.