API: July US petroleum demand up 3.8% month-on-month

Aug. 20, 2020
US petroleum demand, as measured by total domestic petroleum deliveries, was 18.3 million b/d in July. This was the third consecutive monthly increase and a rise of 3.8% (700,000 b/d) from June, but 11.9% (2.5 million b/d) below July 2019 levels.

US petroleum demand, as measured by total domestic petroleum deliveries, was 18.3 million b/d in July. This was the third consecutive monthly increase and a rise of 3.8% (700,000 b/d) from June, but 11.9% (2.5 million b/d) below July 2019 levels.

The rebound since April has amounted to 3.6 million b/d so far—the largest 3-month increase since December 1976. Motor gasoline continued to account for nearly 80% of the gains as light-duty transportation has picked up with recovery through the COVID-19 pandemic.

Consumer gasoline demand, measured by motor gasoline deliveries, was 8.7 million b/d in July. This was a monthly increase of 4.5% (400,000 b/d) but remained 8.5% (800,000 b/d) below year-ago levels.

Over the past 20 years, July motor gasoline demand has averaged just 0.2% m/m greater than that in June, so the majority of last month’s increase appeared to reflect the underlying recovery from the COVID-19 pandemic, as opposed to summer driving seasonality.

Low gasoline prices have helped to support demand. The US average conventional gasoline price was $2.27/gal in July, down by 19.5% ($0.55/gal) from July 2019, according to AAA.

In July, distillate deliveries of 3.6 million b/d rose by 0.2% from June but remained down by 9.1% y/y (400,000 b/d). This was consistent with DAT iQ industry trendlines showing monthly increases in load turnover across industry segments and fleets.

Jet fuel deliveries rebounded to 1.0 million b/d in July, marking their second consecutive monthly increase in 2020 for a total increase of 68.1% between May and July. Increase jet fuel deliveries have been consistent with reported flight activity and passenger demand having risen per Flightradar24 and TSA. However, the deliveries still were down 46% y/y as air travel amid the peak summer season has remained historically weak due to the COVID-19 pandemic.

Deliveries of residual fuel oil, which is used in electric power production, space heating, industrial applications, and as a marine bunker fuel, rose to 400,000 b/d in July. This marked increase of 69.6% m/m and 14.4% y/y, respectively, consistent with a resumption of industrial and marine activity previously weakened by COVID-19 and IMO 2020 implementation.

Deliveries of liquid feedstocks, such as naphtha and gasoil (other oils) used in refining and petrochemical manufacturing, were 4.7 million b/d in July. This was a decrease of 3.8% m/m and 10.6% y/y but remained 25.6% of total US petroleum demand.

Production

In July, US crude oil production was 10.3 million b/d, an increase of 400,000 b/d from revised June data, but 2.6 million b/d below its peak at 12.9 million b/d in November 2019. July marked a fourth consecutive month of year-on-year production declines, consistent with oil-directed drilling activity (180 rigs in July) having fallen to its lowest levels since July 2009.

By comparison, US natural gas liquids (NGLs), which are co-products with natural gas production, reached 4.9 million b/d in July. This was an increase of 3.8% from June and set a record high for the month of July. Natural gas production and, consequently, NGLs held up relatively well through the COVID-19 pandemic.

Trade

In July, US petroleum imports decreased to 7.9 million b/d. This was a decrease of 9.6% m/m (800,000 b/d) from June, with EIA crude oil import weekly data suggesting imports particularly from Saudi Arabia fell at the end of July to near the lowest since 2010.

By contrast, US petroleum exports of crude oil and refined products were 7.6 million b/d. This represented an increase of 2.8% (200,000 b/d) from June but a decrease of 4.5% (400,000 b/d) compared with July 2019. Within the total exports, 4.8 million b/d was refined products, up by 100,000 b/d m/m. The 2.9 million b/d remainder was crude oil exports that increased by 100,000 b/d m/m to a record for the month of July. Driven by the fall in imports, the US petroleum trade balance narrowed to net imports of 200,000 b/d in July, the lowest for July in more than 60 years.

Refining

US refinery throughput of 14.9 million b/d implied a capacity utilization rate of 78.6% in July. Refinery throughput increased by 5.1% or 700,000 b/d from June, while capacity utilization rose by 3.9 percentage points. Although the absolute levels of throughput and capacity utilization remained seasonally low, the consecutive monthly increases in both metrics offered indications of expected demand recovery.

Inventories

US total petroleum inventories, including crude oil and refined products but excluding the Strategic Petroleum Reserve, were 1.40 billion bbl in July. This was an increase of 0.1% from June, though notably 1.5% below the record set in May for the highest inventories in any month since 1956. Within the total, crude oil stocks of 519.7 million bbl were down by 3.5% m/m from a record 538.8 million bbl in June 2020. The draw-down in crude oil stocks reflected the combination of decreased production and increased refinery throughput.