Total domestic petroleum deliveries, a measure of demand, at 18.4 million bpd in February fell 2.3% from year prior levels due to a 40.2% plunge by residual fuel oil deliveries and a 4.3% drop in “other oils” deliveries, the American Petroleum Institute reported in its latest Monthly Statistical Report released Friday (3/16).
API reported that the steep decline in residual fuel demand is related to users switching to natural gas.
Meantime, the data showed gasoline deliveries edged up 0.9% in February to 8.7 million bpd, marking the first year-on-year increase in demand since February 2011.
API Chief Economist John Felmy said, “Consumer demand for gasoline is still not strong, but the slight increase is notable. It reflects recent improvements in employment growth.”
Recent federal data showed employment growth from January to February in both seasonally adjusted and not seasonally adjusted nonfarm payrolls. This is an improvement over the January changes that reflected a large drop in not seasonally adjusted payrolls but an increase in seasonally adjusted payrolls.
“One must pay closer attention to not seasonally adjusted payrolls to understand the impact on gasoline demand because seasonally adjusted workers don’t buy gasoline—actual workers do—or don’t if they are unemployed,” API said. “Nevertheless, this increase in gasoline demand is not enough to offset the secular changes due to the increase in fuel efficient cars on the road and the demographic changes in the driving-age population.”
Peak gasoline demand occurred in July 2007 at 9.640 million bpd.
Deliveries of distillate fuel, which include both diesel and heating oil, increased by 0.6% to 3.9 million bpd. Ultra-low sulfur diesel deliveries showed slower growth of 2.6% from last year but the high-sulfur type tumbled 10.4% from February 2011 due to the relatively warm weather this year. Distillate fuel deliveries have declined significantly since their peak of 4.582 million bpd in February 2007. Jet fuel deliveries increased 2.0% versus year prior levels.
According to the data, supplies for refined products remained ample, with gasoline production of 9.1 million bpd setting a record high for February. Distillate fuel production at 4.4 million bpd was at a record high for February and year to date. Refinery utilization rates for the month profiled were also higher than year prior levels.
“Despite the recent announcements on declines in refinery capacity due to closures in the North East region, February’s total refinery inputs were higher than last year’s levels by 9.3%,” API reported. “Production of all four major products—gasoline, distillate, jet fuel and residual fuels was greater than demand for those products, so exports of refined petroleum products increased by 18.1%.”
Gasoline supplies at 228.8 million bbl at the end of February edged up 0.5% from the month prior but declined 0.3% versus February 2011 levels. Distillate fuel inventories were down from month-ago and year-ago levels and reached 140.9 million bbl, the data showed. Jet fuel stocks were up from year-ago levels but down from a month ago while stocks of “other oils” declined on both the month and year basis. Crude oil stockpiles at 345.8 million bbl in February rose 6.2% on the year. API reported total inventories of all oil were down from month ago and year ago levels by about 5%.
Domestic crude oil production rose 2.9% in February to average 5.775 million bpd. Alaskan production at 610,000 bpd dipped 0.2% from February 2011, while API reported North Dakota produced record levels of crude oil at 546,000 bpd in January. Imports of crude oil and refined products fell 0.7% in February to average 10.4 million bpd as increased production offset the lower import levels.