API says gasoline demand weakest in more than a decade
By OGJ editors
WASHINGTON, DC, July 16 -- In its latest half-yearly statistical report, the American Petroleum Institute Wednesday said gasoline demand growth in the past 6 months was the weakest it has seen since the 1990-91 recession. Demand was equally grim for jet fuel: during January-June, there was an "unprecedented" double-digit, 2-year decline in jet fuel demand, API said.
Reasons for the latest decline included higher retail and oil prices, the sluggish US economy, and bad weather that slowed travel, API cited. Total product demand slipped 0.2% in the second quarter compared to the same period last year, API said.
Additionally, total petroleum imports of oil and products now account for 63.5% of the US market—a new high.
Gasoline declines, distillate up
Deliveries of gasoline from refineries, terminals and pipelines to wholesalers, retailers, and end users fell a marginal 0.3% in the year's first half compared to a healthier 2.8% increase in the same period last year, according to the API Monthly Statistical Report.
Distillate fuel oil demand increased 11% in the first quarter's need for cold weather heating, but later fell to a 4.4% increase as warmer weather settled in for the second quarter compared to a year ago. Sharply higher natural gas prices meant many electric utilities likely switched to other, less expensive distillate or residual fuels, a likely reason why there was a second quarter increase of 160,000 b/d, said API.
Demand for jet fuel in the most recent 3 months fell more than 6% to the lowest quarterly level since the end of 2001, after the Sept. 11, 2001, terrorist attacks on the US severely hampered air travel. This time the biggest slump, 20%, was in international flights and the dominant factors were the war on Iraq, the outbreak of Severe Acute Respiratory Syndrome (SARS), and the poor economy.
"The slumps in the early 1990s (3%) and in the early 1980s (8%) never reached double digits, but the slump in the first half of this year was 11% compared to the same time period in 2001," API said.
Supply side slips
API said the decade-long decline in domestic oil production continued with a 1.4% drop compared to the first half of 2002. The output of 5.80 million b/d of oil was the lowest in 50 years (excluding weather stoppages) and 40% lower than its peak in 1970 of about 9.6 million b/d. In Alaska, the production decline was 2.3% compared to first half 2002 and, at 1 million b/d of oil, only half of its 1988 peak of 2 million b/d, said API.
API's most recent drilling data showed a 19% increase in second quarter natural gas well completions from a year earlier. Oil well completions increased 28%.
Because of higher world oil prices in the first quarter, oil imports fell to their lowest quarterly level in 3 years, but still surged to 9.8 million b/d of oil in the second quarter—their highest level ever. Combined with higher product imports, such as gasoline, the 12.5 million b/d of total oil imports set a quarterly record, API said.
Total petroleum imports of oil and products now account for 63.5% of the US market, a new high. Meanwhile, overall refinery activity in the second quarter increased 2.4% percent, more than double the first quarter's rate compared to the quarters a year ago.
June highlights
Total oil inventories were 281 million bbl at the end of June, 11.6% lower than a year ago and 35 million bbl below the average June level for the previous 5 years.
Natural gas liquids production in June was 6.8% lower than June 2002.
June Canadian oil imports were 5.4% less than June last year.
June distillate stocks of 109 million bbl were down 18.1% from June 2002.
June's jet fuel stocks were 38.1 million bbl, down 2.3% from a year ago.
Total domestic oil stocks at the end of June were 948.9 million bbl, an 8.7% decline from a year ago and 1.9% less than at the end of May.