Once again, yesterday’s EIA data highlighted the weakness in US implied demand. There were WoW losses across the board, reversing any gains from the week before. At 17.7mmbd, all product demand was the lowest since April 1999 and was down 6.3% YoY. The 52-week average all product demand is now -1.8% YoY.
For the second time this year, implied gasoline demand, which accounts for nearly half of all product demand, dipped below 8.0mmbd. Prior to this, the last time gasoline demand was sub 8.0mmb was in 2001, just after the 9/11 terror attacks. Gasoline demand is down 6.8% YoY and the 52-week average gasoline demand is now -2.4% YoY. Distillate demand, which started off 2011 weakly but gained over the course of the year to support all product demand, stood at 3.7mmbd, down 4.0% YoY. The 52-week average distillate demand is now just 1.4% YoY, significantly down from the 7.3% YoY peaks of April 2011.
Refinery utilisation fell 0.4% WoW, where the market was expecting no change, though refinery throughput is in line with the prior five-year average typical of this time of the year. On road gasoline prices rose USc 5/US gallon last week while diesel prices stayed flat, reflecting rising gasoline cracks.
On the back of better than expected US ISM data and Iran still in the background, the market has largely ignored this bearish set of EIA data, we believe. In our view, the data confirms demand contraction, while the market might already have moved into an over-supplied position, which is fundamentally bearish.
The US EIA data recorded a 4.2mmb build in crude inventory (vs. +2.6mmb expected), a 0.1mmb draw in distillate (vs. -1.4mmb expected) and a 3.0mmb build in gasoline (vs. +0.5mmb expected).