API Reports the US Oil Demand Drops 'Significantly' in First Half of 2008

U.S. oil demand was significantly down for the first six months of 2008, API said today in its Monthly Statistical Report. While U.S. refiners churned out record and near-record amounts of oil products, imports--especially product imports--fell substantially. Deliveries of all oil products, a measure of demand, fell 3.0 percent compared with the same first-half-year period in 2007, with gasoline deliveries slipping 1.7 percent.

For the preceding three years, oil demand had essentially held steady. API statistics manager Ron Planting said, "At 20.08 million barrels per day, total demand was the lowest in five years. And the decline in gasoline demand was the first significant one recorded in 17 years. Higher pump prices and a slowing economy were undoubtedly factors."

At 2.0 percent, the second-quarter decline in demand for gasoline was even greater than for the first six months. However, the 1.8 percent decline for all products for the last three months, compared with the same period a year ago, was less in part because of a 2.1 percent increase in demand for distillates, which includes diesel fuels and home heating oil.

Reflecting continued strong demand for diesel fuel, industry production for that product set new records for the first half of 2008. "Distillate production averaged 4.23 million barrels per day, the highest ever for any six-month period," said Planting. "However, gasoline production was down only 1 percent, leaving it at the second highest level for any January-through-June period."

Overall U.S. oil imports, including crude oil and oil products, sank to their lowest first-half level since 2003, at less than 13 million barrels per day.

Crude oil inventories declined to 301 million barrels at the end of June, down 54 million barrels from last year’s recent-year record and the lowest mid-year level since 2003. Consistent with relatively stronger demand for diesel fuel than for gasoline, gasoline inventories ended June up from a year ago while diesel inventories were down. U.S. crude oil production fell by 2.2 percent for the first half of 2008 compared with 2007.