U.S. oil demand at lowest level in 16 years

PanARMENIAN.Net - U.S. oil demand fell to the lowest level in 16 years in 2012 as economic growth weakened while domestic output surged the most in more than 150 years, the American Petroleum Institute said, according to Bloomberg.

Total petroleum deliveries, a measure of demand, dropped 2 percent from 2011 to 18.6 million barrels a day last year, the lowest level since 1996, the industry-funded group said in a monthly report today. Oil production increased the most since 1859 to the highest level in 15 years, the API said.

“The demand decline is driven by the weak economy,” John Felmy, chief economist of the API, said in a phone interview. “You have weak gasoline demand, which is tied to employment and retail sales. And you’ve got weak diesel demand that reflects a slowdown in the manufacturing sector.”

Domestic oil production jumped 779,000 barrels a day in 2012, or 14 percent, to 6.43 million, the API reported. A combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma.

For December, output climbed 16 percent from a year earlier to 6.97 million barrels a day. Production in the lower 48 states rose 17 percent to 6.38 million. Alaskan production was unchanged at 592,000.

“The year was a story of contrasts,” Felmy said in a statement. “U.S. product demand weakened across the board, while domestic production of crude oil surged.”

For the month of December, demand slid 2.1 percent from a year earlier to 18.4 million barrels a day. It was the lowest level of December demand since 1996. Gasoline deliveries were 8.58 million barrels a day, down 1.1 percent.

Use of distillate fuel, a category that includes heating oil and diesel, dropped 7 percent last month from a year earlier to 3.59 million barrels a day. Demand for ultra-low-sulfur diesel, the type used by the trucking industry, fell 3.2 percent to 3.3 million.

Jet fuel consumption increased 2.7 percent in December from a year earlier to 1.39 million barrels a day.