Demand for distillate drops by double digits in January - API

U.S. distillate deliveries (a measure of demand) fell by double digits in January, compared with the previous year’s levels, highlighting the fit-and-start nature of the economic recovery, according to API’s Monthly Statistical Report, which reflects data from January. Distillate demand, particularly low sulfur distillate demand, tracks economic growth closely. 

“A sharp drop in low sulfur distillate demand is a concern,” said API Chief Economist John Felmy, noting that January 2010 deliveries of 15-parts-per-million-sulfur diesel, which is used by trucks shipping goods on highway, plunged 11.5 percent from last January to 2.7 million barrels per day. “Looking at this number, you can see that the economic recovery is still mixed.” 

January’s total petroleum deliveries dropped 3.8 percent from the same month a year ago, to 18.4 million barrels, levels last seen in September 2009. The past two months of data – December 2009 and January 2010 – show a 4.4 percent drop in deliveries. Residual fuel oil deliveries for January plunged 20.2 percent from January 2009, reflecting a decrease in residual fuel demand for industrial purposes and for fueling shipping in international trade, in part the result of the fuel switching to natural gas. 

Unlike deliveries of most other petroleum products, January gasoline deliveries increased over last year, rising 0.9 percent to average 8.8 million barrels per day. Despite the increase, gasoline demand was well below the peak of 9.6 million barrels per day reached in July 2007. 

Total crude oil and products imports jumped 5.8 percent in January from the previous month, reversing December’s decreases: crude imports fell by 4.6 percent while product imports increased from the prior month to 10.7 percent. 

Reflecting the overall drop in refined product demand, U.S. refineries continued to operate at below 80 percent capacity in January. January refinery crude oil inputs of 13.8 million barrels per day were 4.9 percent lower than those of January 2009. The average utilization rate for U.S. refineries in January fell to 78.1 percent but was nearly 9 percentage points higher than for all manufacturing, which increased to 69.2 percent in January, according to the latest Federal Reserve Board data.

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