Latest EIA oil data do not support a soft or softening global oil demand story
June 5, 2024
Key Observations:
U.S. oil refinery utilization increased by 1.1%-points to 95.4% in the week ending May 31, according to EIA data published today. Since the end of April, this utilization rate has increased sharply from about the 20-year seasonal average to just shy of the 20-year seasonal high.
Parallels with 2005 continue to mount. This fact bears close attention given prominent forecasters’ universal agreement* that the 2024 hurricane season threatens to be one of the most active and most dangerous since modern tracking began. Storms knocked out 20%-points of refinery utilization for extended periods in 2005 and 2017.
The uplift in U.S. petroleum refinery utilization brings year-to-date U.S. demand growth for crude oil to +244 thousand b/d (+1.6%) YoY.
The data also show a large increase in oil products supplied to the domestic market. For the week ending May 31, this figure was +1.29 million b/d (+6.7%) YoY, driven by a large and noteworthy increase from the industrial sector. Ytd, U.S. oil product demand is running +101 thousand b/d above last year, inclusive of drags from: (a) very hot winter on ULSD and propane demand and (b) work-from-home on gasoline consumption.
The largest demand strength comes from the export channel. Rest of world demand growth for U.S. crude and oil products has averaged +500 thousand b/d (+4.9%) YoY ytd as of May 31.
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