In December, the U.S. witnessed a significant decline in the demand for distillate fuel oil, with product supplied dropping to 3.61 million barrels per day (bpd), marking a 10% decrease from November and the lowest level recorded since June 2020, as per data released by the Energy Information Administration (EIA) on Thursday.
Analysts attribute this decline in distillate fuel demand, which includes diesel and heating oil, to mild weather conditions and subdued industrial output. Giovanni Staunovo, an analyst at UBS, highlighted that the manufacturing Purchasing Managers’ Index (PMI) contracted for the 15th consecutive month in January, further impacting demand for distillate fuels.
The EIA’s measure of demand, product supplied of distillates, experienced a significant decline of 397,000 bpd in December compared to November, marking the largest monthly drop since April 2020.
While gasoline demand also saw a decline in December, the decrease was relatively modest. Product supplied of finished motor gasoline stood at 8.84 million bpd, slightly lower than the 8.85 million bpd recorded in November, as per the EIA’s Petroleum Supply Monthly report.
The overall demand for crude oil and petroleum products in the U.S. dipped by 2% in December to 20.3 million bpd, according to the report.
In terms of crude oil production, the U.S. witnessed a slight decrease in December, with output falling to 13.315 million bpd from November’s record high of 13.319 million bpd, as indicated by the EIA’s monthly 914 production report released on Thursday.
Notably, crude oil output in Texas declined by 20,000 bpd in December to 5.637 million bpd after reaching a record peak in the previous month. Conversely, neighboring New Mexico saw a 1.2% increase in output to a record high of 1.928 million bpd.
Looking ahead, analysts anticipate another decline in total U.S. production in January due to a cold snap affecting production levels.
Additionally, gross natural gas production in the U.S. Lower 48 states surged to a record high of 118.2 billion cubic feet per day (bcfd) in December, up from the previous record of 118 bcfd in November. Top gas-producing states like Texas and Pennsylvania witnessed an increase in monthly output during December.