US oil demand rose y/y by 0.14 mb/d to 20.71 mb/d in June, a 0.13 mb/d downward revision to the weekly data compared to our projections of a 0.35 mb/d downward revision. With the release of Petroleum Supply Annual, baselines were also revised, with June 2017 revised higher by nearly 0.1 mb/d. Combined demand for the four main products was flat y/y in June. Meanwhile, demand growth for ‘other oils’ increased by 0.14 mb/d y/y to 4.85 mb/d.
US gasoline demand increased by 26 thousand b/d y/y to 9.80 mb/d, as vehicle miles travelled (VMT) increased by 0.3% y/y in June. Positive y/y changes in VMTs in the South Atlantic and South Gulf regions were cancelled out by declines in the North Central and North East regions. Although economic activity remains robust, VMT figures have been levelling out as higher prices take a toll on demand. US gasoline prices increased by 46 cents y/y to $2.98 per gallon in June. While demand rose in PADD 3 by 72 thousand b/d y/y to 1.5 mb/d, demand fell in PADDs 1 and 2 by 28 thousand b/d y/y and 11 thousand b/d y/y to finish the month at 3.4 mb/d and 2.8 mb/d respectively.
US distillate demand was basically flat y/y, decreasing by 10 thousand b/d to 3.95 mb/d, although still 0.11 mb/d above the five-year average. US consumer spending continues to provide impetus, allowing the economy to maintain one of the best trajectories in years. A high consumer confidence environment is driving retail sales, keeping inventories low. This combination of high demand and low inventories continues to feed the US freight market.
US crude imports rebounded to 8.48 mb/d in June, up by 0.66 mb/d m/m and 0.39 mb/d higher y/y despite a 0.62 mb/d fall in arrivals of OPEC crude. Imports from Canada led the gains, rising by 0.69 mb/d y/y to a record high of 3.99 mb/d with receipts by rail also at a record high. Imports of Mexican grades were also higher, hitting 0.83 mb/d—the highest level since November 2014.
US crude exports hit another record high in June, rising by 0.19 mb/d m/m to 2.20 mb/d, a massive 1.34 mb/d higher y/y. While flows into Europe slowed from May’s record high to just under 0.60 mb/d in June, Asian buying interest leapt to new highs at a whopping 1.24 mb/d in June, more than five times higher than the 0.21 mb/d recorded in June 2017.