US petroleum demand, as measured by total domestic petroleum deliveries, was 20.8 million b/d in October, which was up by 3.3% from September and 3.9% compared with October 2017. This is according to the American Petroleum Institute’s latest monthly statistical report.
Through the year’s first 10 months, petroleum demand remained at its strongest since 2007, averaging 20.4 million b/d and up nearly 600,000 b/d over the same period in 2017.
Consumer gasoline demand, measured by total motor gasoline deliveries, was 9.5 million b/d in October, the highest on record for the month of October. This represented an increase of 2.4% from September and 1.2% from October 2017.
Notably, this was the first time in the past 5 years demand rose between September and October.
In October, distillate deliveries of 4.2 million b/d increased by 6.5% from September and 5.6% compared with October 2017. Through the first 10 months of the year, distillate demand was at its highest since 2007.
Kerosene jet fuel deliveries of nearly 1.8 million b/d increased by 0.4% compared with October 2017. This was the second strongest October monthly demand on record. Through the first 10 months of the year, jet fuel demand averaged 1.7 million b/d, the highest on record.
In its latest report, the International Air Transport Association (IATA) reported US domestic air passenger kilometers increased by 6.2% in September compared with September 2017. As the pace of growth moderated from stronger levels in prior months, the IATA attributed slowing mainly to hurricane-related travel disruptions in September and less demand stimulation due to low airfares.
Residual fuel oil demand was 297,000 b/d in October, A decrease of 14.7% from September and 8% below October 2017.
Marine shipping activity and residual fuel oil demand were supported by US importers’ inventory building in advance of the holiday season as well as efforts to beat tariffs with escalation of the China-US trade war. However, marine shipping appeared to slow in October, and the Baltic Dry Index declined by 5.5% between September and October.
Refining and petrochemical demand for liquid feedstocks, naphtha, and gas oil was 5.1 million b/d in October, an increase of 3.3% from September and 13.1% above October 2017. This reflected solid refining and petrochemical activity and generally was consistent solid activity suggested by American Chemistry Council’s Chemical Activity Barometer, which increased 3% year-over-year in October.
Supply
US crude oil production of 11.2 million b/d in October marked a record for the month of October and, with revision to past estimates, the third consecutive month of production over 11 million b/d.
The rise in production has been consistent with Baker Hughes’ reported increases in US oil drilling activity, which increased to an average of 863 oil-targeted rigs in 2018 third quarter from 843 in 2018 second quarter. As of the first week of November, US oil-targeted drilling accelerated to 874 rigs, which positioned for further supply gains.
Natural gas liquids production reached 4.5 million b/d in October, which was a record for the month. Through the first 10 months of the year, NGL production has averaged a record 4.2 million b/d and increased by nearly 600,000 b/d above the same period a year ago.
Trade
US petroleum exports continued to rebound for a second consecutive month in October.
Exports were 7.6 million b/d in October, which was an increase of 200,000 b/d from September and 500,000 b/d above October 2017. The increase was attributable to crude oil, as refined product exports remained flat between September and October.
Monitoring the latest data on country-specific shifts in international trade through September showed China and Hong Kong purchased no US crude oil for the second consecutive month. However, as US oil prices remained nearly $10/bbl below international ones, the European Union, Japan, Mexico, and Canada in total increased their purchases of US crude oil and refined products by more than $1 billion between August and September.
US petroleum imports have also risen. In October, US imported 10.2 million b/d of crude oil and refined products, which was an increase of 400,000 b/d or 4.5% year-over-year. Roughly 70% of the increased imports was refined products needed to meet US demand despite strong continued domestic refining throughput.
Refinery, inventories
US refineries set a record for the month of October with gross inputs of 16.6 million b/d and ran at their highest percentage of capacity operated (89.3%) for the month since 2004. Through the first 10 months of the year, refinery throughput of 17.3 million b/d is the highest on record.
In October, total petroleum inventories were 1.24 billion bbl, which was an increase of 0.1% from September but 2.8% below October 2017. The increase was attributable to that in US crude oil inventories, which rose 6.3% between September and October; this was the biggest monthly accumulation since March 2015.
