US oil traders still looking for any signs of strengthening oil demand

Nov 30, 2009 01:00 AM

US oil demand in September was 2.74 % less than previously estimated, the government said, dampening the outlook for a strong recovery in petroleum consumption.
September US petroleum consumption was lowered 518,000 bpd to 18.362 mm bpd, the Energy Information Administration said in its monthly petroleum supply report.

Oil traders have been looking for any signs of strengthening oil demand in the United States, the world's largest petroleum consumer. Over the past year a global recession has cut oil consumption around the world, but expectations of an economic rebound pushed oil prices to levels around $ 80 a barrel over the past few months.
Despite the revision, US oil demand in September was up 523,000 bpd compared to a year earlier, the first year-over-year increase in oil consumption for any month since July 2007.

The EIA said the rise in petroleum consumption this September reflects the impact of two hurricanes on US oil supplies during the same month last year. The storms "just totally disrupted the supply chain, so we had a drop in September (2008)," said Doug MacIntyre, senior oil market analyst at EIA.
US oil consumption fell to 17.839 mm bpd in September 2008, its lowest level in more than 10 years. September gasoline consumption climbed 4.7 %, or 400,000 bpd, compared to a year earlier. This was the fourth month in a row that gasoline demand increased from a year earlier.

The higher fuel consumption occurred as US highway travel in September soared 2.5 % from a year earlier, rising to 240.7 bn miles (387.4 bn km), according to the US Transportation Department. It was the biggest jump in miles travelled since driving rates started rising in June.
As gasoline consumption continued to rise, demand for other petroleum products remained weak. Distillate demand in September was down 7.5 % from a year ago, while jet fuel use was down 5 %. September residual fuel demand plummeted 34.4 % to 341,000 bpd.

Below is a chart comparing the EIA's final monthly demand numbers withthe agency's previous weekly demand estimates and final year-ago numbers:

EIA monthly demand data (in millions of bpd)
Product -- Sept -- For Sept prev. est. -- Change vs. year ago -- Year ago %
Gasoline -- 8.897 -- 9.063 -- -1.83 % -- 8.497 -- 4.71 %
Distillate -- 3.459 -- 3.403 -- 1.65 % -- 3.740 -- -7.51 %
Jet fuel -- 1.404 -- 1.439 -- -2.43 % -- 1.478 -- -5.01 %
Residual -- 0.341 -- 0.439 -- -22.32 % -- 0.520 -- -34.42 %
Total -- 18.362 -- 18.880 -- -2.74 % -- 17.839 -- 2.93 %

US year on year oil demand changes:
August 2009 -2.8 %
July 2009 -4.0 %
June 2009 -4.7 %
May 2009 -8.2 %
April 2009 -6.8 %
March 2009 -5.8 %
Feb 2009 -6.6 %
Jan 2009 -5.5 %
Dec 2008 -7.6 %
Nov 2008 -7.2 %

This chart compares the latest monthly EIA petroleum supply report with the previous weekly report and final year-ago numbers. The EIA's monthly report always differs from the weekly report as the monthly reflects data supplied from all US energy companies, while the weekly report surveys the biggest companies representing about 90 % of the market.
The total demand number reflects many petroleum products beyond gasoline, distillate, jet fuel and residual fuel listed in the table.

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