US oil demand rose y/y by 0.78 mb/d to 20.77 mb/d in October, a 0.17 mb/d upward revision from the weekly EIA estimates—we had expected a 0.1 mb/d downward revision. Combined demand for the four main products increased by 0.18 mb/d y/y in October, while demand for ‘other oils’ grew y/y by 0.6 mb/d to 5.2 mb/d.
Despite all US regions reporting higher y/y vehicle miles travelled (VMT) in October, particularly the West (+1.8%) and South Atlantic (+1.7%), US gasoline demand decreased by 84 thousand b/d y/y to 9.3 mb/d, led by PADD 3 (-32 thousand b/d) and PADD 5 (-38 thousand b/d), as prices rose (+32 cents y/y to $2.94 per gallon in October).
US distillate demand grew by 0.37 mb/d y/y to 4.4 mb/d despite the ISM manufacturing index falling by 3.5% m/m in October, though it remained strong at 57.7. The Freight Transportation Service Index (TSI) rose by 7.3% y/y in October (+1.3% m/m), reaching an all-time high above the previous all-time high reached in June 2018.
US crude exports hit another record high in October, rising by 0.21 mb/d m/m and by a massive 0.60 mb/d y/y to 2.33 mb/d, led by a new record high 0.46 mb/d arriving in South Korea (+0.17 mb/d m/m, +0.41 mb/d y/y). Exports to Canada also ramped up, by 0.13 mb/d m/m to 0.47 mb/d but flows to Europe fell to 0.58 mb/d (from 0.67 mb/d in September). Lower flows to the UK led the drop, falling by 74 thousand b/d m/m to 0.17 mb/d amid high planned turnarounds and surging freight rates. Flows to China remained zero for the third consecutive month, but we expect Chinese purchases to pick up gradually following the US–China 90-day trade truce agreed at the G20.