US oil demand rose y/y by 0.50 mb/d to 20.62 mb/d in July, a 0.32 mb/d downward revision from the weekly EIA estimates, in line with our projections of a 0.3 mb/d downward revision. Combined demand for the four main products increased by 0.45 mb/d y/y in July. Meanwhile, demand for ‘other oils’ grew y/y by 53 thousand b/d to 4.91 mb/d.
US gasoline demand increased by 45 thousand b/d y/y to 9.64 mb/d, as vehicle miles travelled (VMT) rose by 0.3% y/y in July. VMTs rose in all regions except for the South Atlantic. Demand has been supported by a strong economy, with July unemployment at just 3.9%. US gasoline prices were 49 cents higher y/y at $2.85 per gallon in July, however, providing a headwind to growth.
US distillate demand increased by 0.32 mb/d y/y to 3.96 mb/d, although some indicators showed signs of moderating in July. The ISM manufacturing index was 2.8 ppts higher y/y to 58.1% in July, although the ISM index momentum decelerated m/m. The Freight Transportation Services Index (TSI) reported a 4.8% y/y increase in July and was up by 1.6% y/y in the year-to-July, despite slowing by 0.5% m/m. Still, growth in the last three months has exceeded any outright level previously attained by the TSI index.
US crude imports fell to 7.92 mb/d in July, down by 0.56 mb/d m/m and flat y/y. The m/m declines were led by a 0.42 mb/d reduction in volumes from Canada to 3.56 mb/d. Imports from Mexico were also down, hitting 0.66 mb/d, while OPEC imports fell m/m to 2.67 mb/d. Even as Middle Eastern OPEC members raise output to compensate the drop in Iranian exports, we do not expect exports to the US to rise as new Asian refineries absorb the incremental output.