US oil demand rose y/y by 60 thousand b/d to 20.74 mb/d in July, an 0.43 mb/d downward revision from the weekly EIA estimates—we had expected a smaller adjustment of 0.2 mb/d. Combined demand for the four main products fell by 0.15 mb/d, led by gasoline.
Gasoline demand fell by 0.16 mb/d y/y to 9.48 mb/d. The decline in US gasoline demand is underpinned by the slowdown in the growth in vehicle miles travelled (VMT). VMTs rose by just 1.2% y/y in July. Although the US Consumer Sentiment Index was steady in July (at 98.4), escalating US–China trade tensions drove the index down m/m in August by the most since 2012 to 89.8, which suggests gasoline demand growth remains on fragile ground.
US distillate demand fell by 56 thousand b/d y/y to 3.91 mb/d even though freight markets continued to put in a strong performance. Seasonally adjusted for-hire truck tonnage rose by 6.6% m/m in July (+7.3% y/y) according to the ATA, although tonnage fell back by 3.2% m/m in August (+4.1% y/y). Diesel demand in July fell y/y in all but PADDs 1 and 4, with PADDs 3 and 5 witnessing the biggest declines—down by 63 thousand b/d and 32 thousand b/d y/y.
US crude imports fell by 0.21 mb/d m/m to 6.94 mb/d in July, a y/y drop of 1.0 mb/d. The m/m drop was led by OPEC (-0.35 mb/d) as flows from Saudi Arabia fell to 0.40 mb/d—the lowest level since April 1987. Flows from non-OPEC countries rose m/m by 0.15 mb/d following an increase in shipments from Canada (+0.30 mb/d) and Mexico (+91 thousand b/d).
US crude exports fell m/m in July by 0.47 mb/d to 2.69 mb/d as Hurricane Barry knocked out roughly 0.30 mb/d of production in the Gulf of Mexico (GoM). Asia led the decline, down by 0.36 mb/d m/m to 1.24 mb/d as flows to India fell by 0.15 mb/d to 0.14 mb/d—the lowest level since November 2018. Flows to South Korea and China also fell m/m in July, by 74 thousand b/d and 60 thousand b/d respectively, and US crude heading to China is set to drop sharply from September amid the escalating US–China trade row.