US oil demand growth has accelerated over the past month according to recent weekly data from the Energy Information Administration (EIA). For the four weeks ending November 11th, total US product supplied averaged 20.856 million bpd. This was a modest 82,000 bpd uptick from the previous week, but the four-week average has now increased an impressive 581,000 bpd in just two weeks. More important is that total US oil demand has also quickly moved back above 2021 levels (see chart below). Over the most recent four weeks, total US product supplied was 618,000 bpd, or 3.1%, ahead of the same period last year. Data released in the last two weeks broke a trend of consistently negative US oil demand growth dating back to early July. Absolute levels for US demand are now at the highest levels since March. Note that in the first quarter of 2022 total US product supplied reached 22.112 million bpd, an all-time high, before US oil demand slowed considerably in the middle two quarters of the year.
Divergent US Demand Growth
US distillate demand has been showing resilience of late. Total US distillate supplied was above 2021 levels in three of the past four weeks. Over the most recent four-week period total US distillate demand averaged 4.05 million bpd. This is down from a mid-October high at 4.18 million bpd but still 12,000 bpd 0.3% ahead of the year earlier period. In contrast US gasoline demand continues to struggle with the latest four-week average at 8.836 million bpd still down 594,000 bpd, or 6.3% below year ago levels. Note that in February of this year total US distillate product supplied reached a new all-time high at 4.569 million bpd. According to EIA data the “Other Oils” demand category has become a bullish outlier of late. Over the latest four-week period Other Oil demand averaged 5.16 million bpd. This is up 1.39 million bpd, or 36.9% vs last year, and up 991,000 bpd, or 23.8% above 2019 levels (see charts below).
This category of demand accounts for about a quarter of total US oil demand, on par with distillate or higher, but is made up of several distinct subcategories. As per EIA these include aviation gasoline, kerosene, naphtha-type jet-fuel, natural gas plant liquids and LRGs (except propane/propylene), unfinished oils, other hydrocarbons and oxygenates (except fuel ethanol), aviation gasoline blending components, naphtha and other oils for petrochemical feedstock use, special naphtha, lube oils, waxes, coke, asphalt, road oil, and miscellaneous oils. Other Oil inventories were 290.3 million barrels last week with the make up about 50% NGPLs/LRGs (excluding propane and propylene), about 30% Unfinished Oils and about 10% Asphalt and Road Oil.
Watch the” Other Oils” Category
While less closely watched than US gasoline and distillate demand, this category can provide some early, and important market signals. For example, 4Q is not seasonally strong period for asphalt demand. Likewise, refinery appetite, and upside in oxygenate/blend stock use by refiners, is hampered by the broader industry capacity constraints on refining. This may suggest a strong showing in US NGL exports
Alexander is a physical operations analyst supporting physical crude oil operations for producers. He has a BA in economics from Furman University.