US demand and trade – Jan 2019

Published at 18:59 29 Mar 2019 by

US oil demand fell y/y by 9 thousand b/d to 20.45 mb/d in January, a 0.6 mb/d downward revision from the weekly EIA estimates—we expected a 0.7 mb/d downward revision, due to the government shutdown. Demand for the four main products dropped by 31 thousand b/d y/y, led by 39 thousand b/d and 36 thousand b/d y/y decreases in distillate and fuel oil respectively. 

US gasoline demand was flat y/y at 8.7 mb/d in January, even though energy prices tumbled by 3.1% m/m which should have supported gasoline demand. Cheap gasoline (-35 c/gal y/y to $2.26 per gallon in January) dampened consumer prices by offsetting the rising costs of food and rent, keeping the consumer price index (CPI) unchanged m/m.

US distillate demand fell by 39 thousand b/d y/y to 4.4 mb/d, likely driven by the government shutdown and despite the Freight Transportation Service Index (TSI) increasing by 4.7% y/y. The 0.4% m/m increase in January was the fifth monthly increase in the last six months, increasing 1.2% overall since July 2018. The Institute for Supply Management (ISM) manufacturing index also increased by 4.1% m/m to 56.6, recovering from the steepest 10-year m/m decline in December.

US crude exports rose m/m in January by 43 thousand b/d to 2.58 mb/d amid high CDU outages in the USGC (+0.55 mb/d m/m). The m/m increase was led by Europe (0.54 mb/d m/m) as flows to the Netherlands ramped up by 0.25 mb/d m/m to 0.49 mb/d, a record high, followed by Italy (+0.13 mb/d m/m). But the increase in flows to Europe was partially offset by a drop in Asia (-0.48 mb/d m/m) led by South Korea (-0.34 mb/d m/m) on a high base, with exports falling to their lowest since May 2018, despite exports to Thailand hitting a record high (0.17 mb/d). China halted purchases of US barrels in January amidst personnel changes at Unipec, but two or three VLCCs are expected to head from the US to China in March, with another four possibly sailing in April on exceptionally strong differentials in the Atlantic Basin.

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