Total domestic product deliveries, a key measure of demand, fell more than 8 percent in October compared with October 2004, according to the API Monthly Statistical Report. The month's results provide strong evidence that higher petroleum prices have led to cuts in product consumption, API said, even though it seems unlikely that end-use consumption fell by as large an amount as product deliveries.
Gasoline deliveries fell by 5.6 percent, API reported. Distillate fuel oil, including heating oil and diesel fuel for transportation, fell 7.7 percent. High-sulfur distillate deliveries, including heating oil, fell nearly 12 percent. Warmer weather may be part of the reason for that decline, API said, with heating degree days in the Mid-Atlantic and New England averaging 15 and 6 percent less, respectively, than last year, API said. Deliveries of low-sulfur distillate, required for on-highway vehicles, fell 6.5 percent compared with extremely strong levels in October 2004.
Jet fuel deliveries fell by 17.7 percent. Kerosine jet fuel deliveries in October fell below 1.4 million barrels per day for the first time since June 1995, API said. The decline in kerosine jet fuel deliveries were in part a reflection of a decline in the number of flights as airlines increasingly attempt to save money in the face of record jet fuel prices by consolidating routes and discontinuing flights, API reported.
Retail prices still averaged sharply higher than year-ago levels for October, but they were falling dramatically at month’s end, API said. The national average for regular gasoline fell by 45 cents per gallon over four weeks, or more than 15 percent, API said, the most rapid drop for a similar period ever recorded in the Energy Information Administration's weekly gasoline price series going back to mid-1990.
In the aftermath of Hurricanes Katrina and Rita, refinery utilization last month dropped to its lowest monthly rate since March 1987, API said, averaging just 79.7 percent for the month, down sharply from October 2004's 90.2 percent.
While significant progress was made over the month in getting some refineries back in operation, API noted, at month-end there were still 800,000 barrels per day of hurricane-related shut-ins, and several more refineries were only beginning to gear up for normal operations. Outside of the storm-hobbled Gulf Coast region, refinery utilization was stronger than for a year earlier, but not enough to avoid substantial declines in product output for the nation as a whole, API said. Gasoline production for the month was down nearly 8 percent from a year ago, while distillate production fell by 6.5 percent, jet fuel by 13.1 percent, and residual fuel oil by 11.3 percent from last October's levels.
Total motor gasoline imports in October, including blending components, jumped to a record 1.3 million barrels per day, up more than 40 percent from one year earlier. Overall product imports jumped 15 percent to their highest level since January 2001. Total imports nevertheless declined from last October because of a drop in crude oil imports of 10.5 percent.
The extraordinary 2005 hurricane season continued to affect domestic production in October, with Hurricane Wilma becoming the seventh storm to interrupt domestic crude production in the Gulf this year, API said. Alaskan production continued to lag year-ago levels as well. As a result, October’s domestic crude production was down by nearly 19 percent from October 2004. Domestic crude production in October was 4.19 million barrels per day, down by a daily average of 967,000 barrels, or 18.8 percent from October 2004.
Crude oil inventories rose by 24 million barrels from the end of October to end the month nearly 11 percent above the five-year October average. Gasoline inventories of 201 million barrels and distillate inventories of 125 million barrels both ended the month at above average levels.