This is the inaugural edition of the US demand data review, formerly known as the US demand and trade data review. Detailed information on crude movements and refinery demand is now featured in our new monthly North America Outlook.
US oil demand fell in August by 0.3 mb/d y/y to 21.1 mb/d, a 0.64 mb/d revision down from the weekly EIA estimates. We expected a 0.3 mb/d downward revision for August data. Demand for the four main products fell by 0.11 mb/d, led by diesel.
Gasoline demand increased by 43 thousand b/d y/y to 9.8 mb/d, as vehicle miles travelled (VMT) rose by 1.1% y/y and retail gasoline prices fell by 20 cents y/y to $2.71 per gallon that month. Although US GDP growth slowed in Q3 19 to 1.9%, the consumer continued to hold up better than business investment, suggesting that the downtrend in gasoline demand growth reflects structural factors such as increasing vehicle efficiency and an ageing population that is less likely to drive long distances.
Diesel demand fell by 0.19 mb/d y/y, to 4 mb/d, despite the Freight Transportation Service Index rising to an all-time high of 140.6 (+4.1% y/y) in August. Waning demand will persist given the wider economy’s patchy performance. The ISM manufacturing index dropped by 2.1 ppts m/m, to 49.1 in August, indicating a contraction. A likely smaller harvest y/y this autumn following the poor planting conditions in spring resulted in PADD 2 diesel demand falling by 17 thousand b/d y/y in August. Continued inclement weather implies lower diesel demand in the future as well. The USDA pegged corn harvest completion at 41% in the week ending 25 October. Only 58% of the crop was rated good to excellent, 10 ppts lower y/y.
Jet fuel demand fell by 11 thousand b/d m/m, to 1.85 mb/d, even as US airlines continued to enjoy high load factors and strong fares, supporting capacity growth. Available seat miles rose by 2% y/y in July, and are on an upward trend.
Strong cracks in August contributed to a 0.3 ppts y/y rise in diesel yields while gasoline yields increased by 0.1 ppts m/m. Jet yields were flat m/m.
Total US gasoline imports decreased by 19 thousand b/d y/y to 0.88 mb/d while exports were pegged at 0.75 mb/d (+6 thousand b/d y/y). Refinery maintenance in Latin America enabled USGC gasoline exports to remain elevated at 0.69 mb/d, 27 thousand b/d higher y/y. US diesel exports also rose strongly, to 1.57 mb/d (+0.29 mb/d y/y), while imports decreased by 26 thousand b/d y/y, to 0.15 mb/d.
Total US diesel stocks were higher by 3.4 mb y/y while USEC diesel stocks were 3.3 mb higher y/y at 44.2 mb. Due to the closure of the PES refinery, USEC diesel imports will need to rise by some 0.1 mb y/y once heating demand picks up in earnest. But USGC stocks have been rising lately due to low exports to Europe, pressurising regional diesel prices to help open the export arb. US gasoline stocks fell by 1.4 mb in August and are poised to continue drawing given Tier 3 rules are set to tighten and there is competition from the marine fuel sector for FCC feedstock.