The United States was one of the biggest sources of oil demand growth
in 2015 but the outlook for 2016 is much more muted, according to
official forecasters.
The US transportation sector continues to send mixed signals about
the strength of fuel demand at the end of 2015 and heading into 2016.
US consumers are buying a record number of new vehicles, and more of
them are choosing fuel-hungry crossover utility vehicles, according to
market intelligence supplier Wards Auto.
The volume of traffic on US roads has also hit a new record and is
growing at the fastest rate for almost two decades, according to the
Federal Highway Administration.
But the volume of freight transported by road, rail, air, barge and
pipeline has been trending flat or lower since the end of 2014,
according to the US Bureau of Transportation Statistics.
The amount of freight hauled in November 2015 was actually 1.4 percent lower than in the corresponding month in 2014.
Rail freight movements were weaker in 2015, with the total number of
rail cars and intermodal units moved across the network down 2.5 percent
compared with 2014, according to the Association of American Railroads.
Road freight was fairly flat last year, ending three years of strong growth, according to the American Trucking Associations.
"I remain concerned about the high level of inventories throughout
the supply chain," the association's chief economist warned in a
statement to the media last month.
"The total business-to-inventory sales ratio is at the highest level
in over a decade, excluding the Great Recession period. This will have a
negative impact on truck freight volumes over the next few months at
least."
Sales of the heavy-duty Class 7 and Class 8 trucks employed for most
freight movements ended last year on a soft note according to Wards,
down from the end of 2014.
Stocks of unsold heavy duty trucks at manufacturers and dealerships have risen steeply as sales fell towards the end of 2015.
At the end of December 2015, there was a 70-day supply of Class 8
trucks, up from 43 days at the end of December 2014, according to Wards.
The data on vehicle sales and miles driven is consistent with other
signs of a two-speed economy in which demand from consumers remains
strong while industry-related demand has weakened. Data on fuel
consumption tells the same tale of a two-speed economy.
The volume of gasoline supplied to domestic customers between January
and November was up 2.7 percent compared with the same period in 2014,
according to the US Energy Information Administration (EIA).
But the volume of low-sulphur distillate fuel oil, which includes the
diesel used by trucks and trains, supplied to domestic customers was
flat compared with 2014.
The growth in distillate consumption has been slowing since early 2015 and turned persistently negative from May onwards.
Gasoline consumption, on the other hand, has been growing strongly
for most of 2015, at some of the fastest rates since before the
recession. More recently, however, there have been some signs the growth
in gasoline consumption is moderating, with smaller year- on-year gains
in both October and November.
Gasoline consumption showed only modest year-on-year gains in
December was actually down in January, according to the more timely but
less reliable weekly estimates prepared by the EIA.
Diesel demand looks set to remain subdued for at least the next few
months as US manufacturers, distributors and retailers struggle to cut
excess inventories and deal with softer industrial demand.
The question is whether the slowdown in gasoline demand growth will be revised away, rebound, or turns into a longer pause.
The EIA is currently forecasting gasoline consumption will rise by
70,000 barrels per day in 2016, a much smaller increase than the 240,000
bpd increase in 2015.
By contrast, distillate consumption is predicted to increase by 80,000 bpd in 2016, after declining by the same amount in 2015.
Overall, total US liquid fuels consumption is predicted to rise by
160,000 bpd, down from 270,000 bpd in 2015 ("Short-Term Energy Outlook",
EIA, Jan 2016).
During 2015, oil consumption in the United States increased almost
300,000 bpd according to the International Energy Agency (IEA).
Increased fuel consumption in the United States accounted for
one-sixth of the global increase in oil demand last year of 1.7 million
bpd, according to the IEA.
