A record two-month price drop contributed to a surge in U.S. gasoline demand of more than six percent in October compared to year-ago levels though overall oil demand is still lagging 2005 levels on a year-to-date basis, according to API, the national trade association of the oil and natural gas industry.
In its Monthly Statistical Report covering October 2006, API also noted that U.S. stockpiles of crude oil and refined products stood well above their five-year average for the month despite a drop in refinery activity due to scheduled maintenance. High-sulfur distillate inventories, including heating fuel, ended the month about 8 percent above the historical five-year average. Imports of both crude oil and refined products remained strong in the month.
“Inventories are in good shape as we enter the peak heating season,” said Ronald J. Planting, manager, statistical information and analysis, for API. “Getting heating oil to consumers over the next few months also depends on avoiding frozen waterways and other logistical problems that severe weather can cause.”
API’s figures show deliveries of ultra-low sulfur diesel fuel – the new, cleaner fuel required for on-highway use this year – amounted to more than three-fourths of all low-sulfur distillate deliveries in October. For the month, deliveries of clean diesel averaged 2.69 million barrels per day.
Part of the gasoline demand increase was the result of unusually weak deliveries, a proxy for demand, a year ago in the aftermath of hurricanes Katrina and Rita, but this October’s deliveries were still surprisingly strong, API data shows. Distillate deliveries also rose strongly over depressed year-ago levels, while both jet fuel and residual fuel oil declined. All together, total domestic petroleum deliveries for October showed an increase of 4.6 percent over last October’s level, but year-to-date results still experienced a decline of 0.6 percent.
U.S. refiners were busy completing necessary maintenance work in October to have their plants ready to meet winter heating demand. Input to distillation units, a measure of overall activity, slipped to 15.6 million barrels per day from September’s 16.1 million barrels per day. But even with the relative slowdown, capacity utilization remained high at just above 90 percent.
October’s domestic crude oil production reached its highest level since April, at 5.2 million barrels per day. That was 14.4 percent above last October’s hurricane-ravaged level, but only about even with October production two years earlier.