U.S. oil demand slipped in August compared to year-earlier levels as lower deliveries of jet fuel and residual fuel oil offset rising gasoline and distillate deliveries, data compiled by the American Petroleum Institute shows. In its Monthly Statistical Report covering August 2006, API noted that U.S. stockpiles of crude oil and refined products stood at their highest levels for end-August in several years, thanks to extraordinary high imports and near-record domestic refinery production.
“Highway diesel continues to show the strongest growth among any of the major products, with declines for all the other major products except gasoline,” said Ronald J. Planting, manager, statistical information and analysis, for API.
Petroleum deliveries, a proxy for demand, fell 2.1 percent in August versus August 2005 levels. A 3.3 percent year-on-year drop in jet fuel deliveries and a dramatic 37 percent decline in residual fuel oil demand led to the overall decline. Residual fuel oil demand slumped as industrial users and electric utilities switched to cheaper natural gas.
Lower prices at the pump boosted gasoline demand as deliveries in August rose 1.7 percent above year-ago levels. Gasoline deliveries’ year-to-date average growth of 0.8 percent is still relatively weak.
Deliveries of low-sulfur distillate, including on-highway diesel, rose a healthy 9.0 percent in August as economic growth continued to propel demand for freight transport.
Though crude oil inventories slid for the fourth consecutive month in August, they ended the month at 333.2 million barrels, the highest August ending level since 1998. Domestic crude production fell to its lowest 2006 level in August at 4.9 million barrels per day, down 6.4 percent below August 2005 levels, after pipeline corrosion at Prudhoe Bay hampered Alaskan production.
Refined product imports reached their highest August level ever, averaging 3.56 million barrels per day, 5.5 percent above year-ago levels. Refineries ran at high rates during the month, with input to distillation units up 3.2 percent above year-ago levels. Gasoline production hit a record high at nearly 9.3 million barrels per day. Inventories of all products except gasoline rose in the month though gasoline stocks still stood at their highest end-August level since 1998.