US oil demand rose y/y by 0.32 mb/d (1.6%) to 20.36 mb/d in May, a 0.19 mb/d upward revision to the weekly data compared to our projections for no significant revision. Combined demand for the four main products grew y/y by 0.24 mb/d, led by another impressive gain in diesel demand. Meanwhile, demand growth for ‘other oils’ remained well below the highs seen across Q1 18, rising by a more modest 74 thousand b/d y/y.
US gasoline demand decreased by 40 thousand b/d y/y to 9.55 mb/d in May, even though vehicle miles travelled (VMT) increased by 0.8 percentage points (ppts) y/y. Despite US gasoline prices increasing by 51 cents y/y to $2.90 per gallon, Memorial Day weekend played a major role in the VMT increase. According to the AAA, there was a 4.8% y/y increase in travellers during the weekend and seven out of eight travellers drove.
US diesel demand rose strongly for a second straight month, up by 0.30 mb/d y/y to 4.27 mb/d, mirroring the robust growth in the domestic economy over Q2 18. US GDP growth hit an annualised 4.1% q/q in Q2 18, the fastest pace in almost four years, buoyed by strong consumer spending and rising government spending. Moreover, some of the strongest growth results in the retail sector have come in highly freight-dependent segments—sales at furniture and home furnishing stores over H1 18 were 5.3% higher y/y while non-store retailers (predominantly online) have seen sales rise by a whopping 10% y/y.
US crude exports hit yet another record high in May, rising by 0.25 mb/d m/m to 2.01 mb/d and were some 0.98 mb/d higher y/y. Flows to both Asia-Pacific and Europe hit record highs in May. Asian volumes hit 0.83 mb/d, a sizeable 0.25 mb/d higher m/m, while flows to Europe stood at 0.81 mb/d compared with April’s record 0.74 mb/d. US crude exports look set to have hit a new record high in June. Waterborne volumes averaged 2 mb/d in June according to cargo tracking data from Kpler, while the EIA’s weekly data would suggest overall exports averaged around 2.4 mb/d across the month. However, exports should fall m/m in both July and August as light crude arbs have closed amid overhangs of competing Ekofisk in Europe and unsold Murban in Asia.