Fuel Demand in U.S. Rises on Highway Diesel Use, API Says
U.S. fuel demand rose last month as the consumption of distillates, including diesel used by drivers, jumped to a record for August, according to the American Petroleum Institute.
Total deliveries of petroleum products, a measure of demand, increased 0.3 percent to 19.7 million barrels a day last month from a year earlier, the industry-funded group said in a report today. Year-to-date consumption averaged 19.1 million a day, down 0.3 percent from the same period in 2010.
Demand for highway fuel rose as truck traffic increased with the U.S. recovery from floods, earthquakes and tropical storms and as manufacturing expanded unexpectedly, API said. The distillate gain made up for gasoline deliveries that reflected the lowest level of August consumption in the past decade.
“The manufacturing index is continuing to perform well, and distillate deliveries are directly related to manufacturing output in the U.S.,” Raghavan Narayanan, senior economic analyst at the API in Washington, said in an interview. “Following hurricanes and floods, there’s usually a recovery phase that goes on and we see lots of trucking demand.”
Deliveries Rebound
Total fuel deliveries rebounded last month after dropping in July, the only monthly decline this year.
The increase in demand for distillates “accords with data that suggest modest growth in manufacturing, but consumers remain cautious,” John Felmy, API’s Washington-based chief economist, said in the report.
Consumption of distillate fuels, a category that includes diesel and heating oil, rose 11 percent to 4.25 million barrels a day from the same period last year. Demand for ultra-low sulfur diesel, the type used on highways, climbed 13 percent to average 3.87 million barrels a day, the report showed. Heating- oil use tumbled 4.9 percent to 371,000 barrels a day.
Jet-fuel use climbed 3.8 percent to an average 1.54 million barrels a day last month compared with the same period in 2010.
The Institute for Supply Management’s U.S. factory index unexpectedly expanded in August, showing the two-year economic recovery may be sustained.
The index fell to 50.6 last month, the lowest level since July 2009, the Tempe, Arizona-based group said Sept. 1. Economists had projected the gauge would drop to 48.5, according to the median forecast in a Bloomberg News survey. Figures greater than 50 signal expansion.
‘Divergent Paths’
“U.S. consumer activity and industrial activity traced divergent paths in August as distillate fuel deliveries hit record highs for the month while motor gasoline deliveries fell to a 10-year low,” according to the API report.
Gasoline demand declined 1.3 percent to 9.133 million barrels a day in August compared with the same month last year, the report showed.
Demand for the motor fuel fell as the U.S. unemployment rate held at 9.1 percent last month, the Labor Department reported. The jobless rate has been at 9 percent or higher for the past five months.
Gasoline futures on the New York Mercantile Exchange fell 2.6 percent in August to $3.0320 a gallon. They dropped 10.65 cents, or 4 percent, yesterday to settle at $2.56 a gallon. Prices have risen 4.4 percent this year.
U.S. crude-oil production fell 5.5 percent to an average 5.14 million barrels a day, according to the API report. Output in the lower 48 states dropped 6.3 percent to 4.59 million barrels a day, the institute said, while Alaskan production increased 2 percent to 549,000 barrels a day.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
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