US oil demand rose by 0.53 mb/d (2.6%) y/y to 20.57 mb/d in March, a 0.28 mb/d downward revision to the weekly data, compared with our projections for a 0.70 mb/d downward revision. Combined demand for the four main products rose by 37 thousand b/d y/y despite a sharp drop in fuel oil demand and the earlier timing of Easter, which fell at the end of March and beginning of April this year compared to mid-April in 2017. Demand for ‘other oils’ continued to rise strongly, up y/y by 0.49 mb/d, led primarily by ethane.
US gasoline demand increased by 94 thousand b/d y/y to 9.45 mb/d, exceeding the 0.5% y/y increase in vehicle miles travelled (VMT). PADD 3 demand rose by 0.17 mb/d y/y to 1.55 mb/d as regional VMTs climbed by 1.3% y/y. In contrast, demand in PADDs 1 and 2 fell y/y by 39 thousand b/d and 50 thousand b/d respectively.
US diesel demand growth slowed to 15 thousand b/d y/y leaving total demand at 4.17 mb/d. Still, while the March reading came in on the soft side—likely due to the earlier timing of this year’s Easter holiday period—Q1 18 demand was 0.23 mb/d higher y/y and all indicators suggest that the slowdown in growth will be transitory with domestic demand looking strong through April and May.
Ethane continued to show very strong y/y gains, up by 0.34 mb/d to 1.52 mb/d. We expect US ethane demand to remain strong, rising by around 0.30-0.35 mb/d y/y in Q3 18 as several world-scale steam crackers come online on the US Gulf Coast, though poor margins for crackers with limited access to polyethylene plants could limit throughputs in the near term.
US crude throughput increased by 0.64 mb/d y/y to 16.67 mb/d in March on lower planned maintenance than a year ago and capacity creep. PADD 3 runs increased by 0.48 mb/d m/m, as Shell Norco and Motiva Port Arthur completed turnarounds. US refiners shifted yields slightly towards distillate and kerosene, increasing yields m/m by 0.4% and 0.2% respectively, while gasoline yields decreased by 1.8% m/m.