In December, U.S. product supplied of distillate fuel oil witnessed a substantial decline to 3.61 million barrels per day (bpd), marking a notable 10% decrease from November. This dip represents the lowest figure since June 2020, as reported by data from the Energy Information Administration on Thursday.
Analysts attribute the decrease in demand for distillate fuels, including diesel and heating oil, to mild weather conditions and weak industrial output. Giovanni Staunovo, UBS analyst, pointed out that the manufacturing Purchasing Managers’ Index (PMI) contracted for the 15th consecutive month in January, indicating a broader economic slowdown.
The data further reveals that the product supplied of distillates, considered the EIA’s measure of demand, experienced a significant drop of 397,000 bpd in December compared to November. This marks the most substantial monthly decline since April 2020.
While gasoline demand also saw a decrease in December, the decline was less pronounced. Product supplied of finished motor gasoline stood at 8.84 million bpd, a slight decrease from the 8.85 million bpd recorded in November, according to EIA’s Petroleum Supply Monthly report.
The overall demand for crude and petroleum products in the U.S. saw a 2% decrease in December, totaling 20.3 million bpd, as outlined in the report.
Simultaneously, U.S. crude oil production saw a marginal decrease in December to 13.315 million bpd, slightly lower than November’s record of 13.319 million bpd, according to EIA’s monthly 914 production report also released on Thursday.
Notably, crude output in Texas dropped by 20,000 bpd in December to 5.637 million bpd, following a record high in the previous month. This marked the first decline in Texas output since September, as indicated by the latest estimates from the EIA. Conversely, neighboring New Mexico experienced a fifth consecutive monthly rise in output, reaching a record high of 1.928 million bpd, a 1.2% increase, according to EIA data.
Giovanni Staunovo anticipates that total U.S. production is likely to decrease again in January due to a cold snap.
On a different note, gross natural gas production in the U.S. Lower 48 states increased by approximately 0.2% to a record 118.2 billion cubic feet per day (bcfd) in December, surpassing the previous record of 118 bcfd in November, according to EIA data.
In leading gas-producing states, December’s monthly output rose by 0.4% in Texas to a new record of 34.9 bcfd and by 0.6% in Pennsylvania to 21.6 bcfd.