1、 JANUARY 2018Volume 42 No. 1 EXECUTIVE SUMMARY In Olympic fashion, U.S. crude oil production scored another perfect “10” in January10.2 million barrels per day of output (MBD), that is. U.S. crude oil and refined product exports of 6.3 MBD in January helped narrow the price difference be-tween U.S.
2、and international crude prices and also moderate U.S. inventories, which in total remained near the top of the 5-year range. Interesting sub-plots emerged in January with ris-ing refinery and petrochemical demand for “other oils,” which advanced to more than 27 percent of U.S. petroleum demand, and
3、refinery throughput that remained at record levels. U.S. drilling activity also responded to higher prices, with more than 230 additional rigs deployed as of early February, compared with one year ago. Strongest oil demand for January since 2007. U.S. petroleum demand, as measured by total domesnull
4、c petroleum deliveries, rose to 20.3 MBD in January, which was an increase of 5.5 percent compared with January 2017 but a seasonal decrease of 1.8 percent versus December. It was the strongest January monthly demand since 2007. Product highlights: Consumer gasoline demand rose by 3.0 percent y/y to
5、 8.8 MBD, which reflected how increases in economic growth and income have trumped the rise in crude oil and gasoline prices. With indicators of solid industrial acnullvity and freight transportanullon, January disnullllate demand eclipsed 4.1 MBD, which was an increase of 0.8 percent versus Decembe
6、r and 9.0 percent compared with January 2017. The 9.0 percent y/y increase marked a reversal of three years of declines for the month. Residual fuel oil, which is used for electric power producnullon, space heanullng, vessel bunkering and other industrial applicanullons, fell to 284 thousand barrels
7、 per day (KBD) in January. This represented decreases of 35.2 percent from December and 38.3 percent versus January 2017 and suggested increased natural gas subsnulltunullon. “Other oils” liquid petrochemical feedstocks, naphtha and gasoil demand of 5.5 MBD was the highest monthly demand on record a
8、nd second highest share of total monthly deliveries since 1965. WTI prices converged toward global levels; NGL prices highlighted rising demand. WTI crude prices averaged $63.70/Bbl. in January, an increase of 10.1 percent from December and 21.3 percent versus January 2017. The price rise reflected
9、solid global market fundamentals. Brent crude oil traded at an average premium of $5.38/Bbl. above WTI crude in January, narrowing from $6.50/Bbl. in December. Composite natural gas liquids (NGL) prices remained above $8.00 per million BTU for the third consecunullve month in January, which indicate
10、d strong refinery and petrochemical demand. Solid economic growth has supported market fundamentals; market volanulllity posed risks. Global economic growth appeared to sustain a pace of 2.9 percent y/y in 2017 on a market exchange rate basis, and based on IMF country esnullmates should remain at th
11、is same pace in 2018. With U.S. tax reform, the Bloomberg consensus upgraded the 2018 U.S. outlook in February to 2.5 percent y/y from 2.2 percent y/y in Q4 2017. Main U.S. economic indicators from the manufacturing PMI, freight transportanullon measures, the employment and wage situanullon, and con
12、sumer sennullment each held up well in January, but one key driver of future consumer sennullment and spending stock market performance fell as volanulllity spiked in early February. The real economy is disnullnct from financial markets but could pose risks to the 2018 outlook. RECORD U.S. OIL PRODU
13、CTION SCORES ANOTHER PERFECT 10 In the Olympic spirit, U.S. crude oil producnullon in January scored another perfect 10 10.2 MBD, to be precise and the highest monthly output on record. This was an increase of 1.1 percent versus December and 15.1 percent from January 2017. Natural gas liquids (NGL)
14、producnullon, a coproduct of natural gas producnullon, sustained nearrecord output in January at 4.0 MBD, which was an increase of 18.4 percent versus January 2017. The rise in oil and gas producnullon followed with a lag between drilling and producnullon. According to current reports from BakerHugh
15、es, Inc., the U.S. rig count averaged 921 rigs during Q4 2017, down from 946 rigs during Q3 2017. So far through Q1 2018, the rig count has risen to 975 its highest level since April 2015 and should posinullon the U.S. for connullnued growth. High refinery unulllizanullon drove record January throug
16、hput. In January, total refinery gross inputs rose by 3.8 percent y/y to 17.1 MBD for the strongest January throughput on record. Gasoline, disnullllate, and jet fuel producnullon each set new monthly records for January. The refinery unulllizanullon rate in January was 92.4 percent, which also was
17、the strongest January unulllizanullon rate on record. Strong sustained U.S. exports helped narrow the gap between Brent and WTI prices. In January, the U.S. exported 6.3 MBD of crude oil and refined products, which was an increase of 10.8 percent y/y. These were the strongest January exports on reco
18、rd and coincided with narrowing of the BrentWTI crude price dierennullal to $3.50/Bbl. as of February 5th from $5.38/Bbl. at the end of January and $6.50/Bbl. in December. Published February 16, 2018 2 Falling U.S. crude oil imports more than oset rising product imports. Imports of crude oil and ref
19、ined products were 10.4 MBD in January, an increase of 6.8 percent from December but a decline of 2.8 percent compared with January 2017. January crude oil imports fell by 6.8 percent y/y, while refined product imports increased by 12.1 percent y/y. Notably, gasoline imports were down by 130 KBD (20
20、.6 percent) y/y in January, while imports of all other refined products were up by 400 KBD (25.2 percent) y/y. Disnullllate imports more than doubled to 426 KBD in January from 204 KBD one year ago. Total inventories remained near 5year highs and masked drawdowns in crude oil and some major products
21、. Total crude and refined product inventories remained atop the 5year range in January. However, crude oil inventories in January were down 17.0 percent y/y and 1.0 percent m/m, placing them in the middle of the 5year range. At the same nullme, however, January stocks of gasoline, disnullllate, jet
22、fuel and residual fuel oil each decreased yearoveryear. Consequently, stocks of other oils grew in January despite the record demand for other oils. Consumer gasoline demand, as measured by total motor gasoline deliveries, rose by 3.0 percent y/y to 8.8 MBD, which was the highest January demand sinc
23、e 2008 and likely reflected how gains in economic growth and income have trumped the rise in crude oil and gasoline prices. WTI crude oil prices averaged in December averaged $1.517 per gallon ($63.70 per barrel), up by 13.9 cents from Decembers price of $1.378 ($57.88 per barrel) and up by 26.7 cen
24、ts (21.3 percent) from January 2017s price of $1.250 ($52.50 per barrel), according to the latest EIA price data. In tandem with the increase in crude oil prices, the average price of regulargrade gasoline increased by 7.7 cents from December to $2.671 per gallon in January. Reformulatedtype gasolin
25、e, which is consumed primarily in urban areas, grew by 7.1 percent y/y in January to 3.0 MBD the highest January demand since 2008. By contrast, convennullonal gasoline is used more in rural areas and rose by 1.0 percent y/y in January to 5.8 MBD. Disnullllate deliveries are a measure of industrial
26、acnullvity and freight transportanullon. In January, disnullllate deliveries exceeded 4.1 MBD, which was an increase of 0.8 percent versus December and 9.0 percent compared with January 2017. For each of the past three years, each consecunullve January exhibitGasoline STRONGEST JANUARY GAS-OLINE DEM
27、AND SINCE 2007 REFLECTED ECONOMIC MOMENTUM. API ESTIMATES JANUARY YEAR TO DATE Million B/D Percent Change Million B/D Percent Change Total domestic deliveries 20.3 5.5 Crude production 10.2 15.1 Total imports 10.4 (2.8) Stocks (million bbl) 1,343.8 (0.7) Distillate Fuel Oil FREIGHT TRANSPORTA-TION D
28、ROVE A 9.0 PER-CENT RISE IN DISTILLATE DEMAND. 3.03.54.04.55.0JFMAMJJASONDmillionb/dDistillate deliveries5year range 2018 2017Strong freight transportation demand drove distillate to highest January in three years 1.01.52.0JFMAMJJASONDmillionb/dKerosene jet fuel deliveries5year range 2018 2017Jet fu
29、els strongest start in 17 years1718192021JFMAMJJASONDmillionb/dTotal deliveries5year range 2018 2017The highest January demand since 20078.08.59.09.510.0JFMAMJJASONDmillionb/dMotor gasoline deliveries5year range 2018 2017January gasoline demand exceeds the 5-year rangeDETAILED PRODUCT REPORT 3 ed de
30、clines from the prior year, so the 9.0 percent y/y increase last month marked a reversal, likely with a solid grounding in the economy. About 93 percent of disnullllate demand in January was for ultra low sulfur disnullllate (ULSD), and ULSD deliveries exceeded 3.8 MBD in January. This was the secon
31、d highest January ULSD demand on record. The remaining 7 percent of disnullllate deliveries was for high sulfur disnullllate fuel (HSD), which is a heanullng fuel in the residennullal and commercial sectors and a marine fuel when blended to upgrade heavy fuel oil. In January, HSD deliveries increase
32、d seasonally by 14.0 percent compared with December and 27.3 percent versus January 2017. Economic indicators suggested solid underlying road freight transportanullon and industrial acnullvity. The U.S. Bureau of the Census reported the value of manufacturers shipments for manufacturing industries r
33、ose by nearly 6.4 percent y/y in Q4 2017 compared with the same period in 2016 and reached its highest level since Q3 2014. The shipments were corroborated by the U.S. Bureau of Transportanullon Stanullsnullcs freight transportanullon services index, which increased by 5.7 percent y/y in Q4 2017. Ke
34、rosene jet fuel deliveries fell by 11.4 percent m/m compared with December but rose 2.4 percent y/y versus January 2017. The monthly decline appears to have been seasonal, and jet fuel demand for January was at its highest level in 17 years. The Internanullonal Air Transport Associanullon (IATA) rep
35、orted that U.S. domesnullc revenue passenger kilometers increased by 3.9 percent y/y in December, and North American airlines had their fastest demand growth since 2011, with full year trac rising 4.8 percent compared with 2016. Also, IATA reported North American airlines capacity climbed 4.5 percen
36、tage points, and the load factor increased by 0.3 percentage points to 81.7 percent. The solid economic backdrop supported outbound passenger demand but was parnullally oset by slowing inbound travel due to new immigranullon and security restricnullons put in place for travel to the U.S., as well as
37、 regional winter weather in Q4 2017. Residual fuel oil is used in electric power producnullon, space heanullng, vessel bunkering and other industrial applicanullons. Despite the EIAs esnullmanullon that heanullng degree days rose in January compared with the prior month and year, residual fuel oil d
38、emand in January 2018 fell to 284 KBD. This represented decreases of 35.2 percent from December and 38.3 percent versus January 2017. The fall in fuel oil demand came anuller two months of excepnullonally strong winter seasonal demand, but also reflected the lowest January fuel oil demand on record.
39、 Residual fuel demand has declined in recent years due to environmental restricnullons and compenullnullon with lowpriced natural gas, and the decline last month may indicate a rise in gas subsnulltunullon. “Other oils” liquid petrochemical feedstocks, naphtha and gasoil of 5.5 MBD represented 27.3
40、percent of total deliveries in January. This was the highest monthly demand on record and second highest share of total monthly deliveries since 1965. In January, other oils demand increased by 4.5 percent from December and 12.8 percent compared with January 2017. Consistent with the rise in other o
41、ils demand, the American Chemistry Councils Chemical Acnullvity Barometer was up by 0.7 percent compared with December and 4.2 percent versus January 2017. PRICES WTI PRICES CONVERGED TOWARD GLOBAL LEVELS; NGL PRICES HIGHLIGHTED RISING DEMAND. WTI crude prices averaged $63.70/Bbl. in January, which
42、was an increase of 10.1 percent from December and 21.3 percent versus January 2017. The rise in WTI prices reflected solid globResidual Fuel Oil FUEL OIL DEMAND FALLS TO ITS LOWEST JANUARY ON RECORD. Kerosene Jet Fuel JET FUEL DEMAND SUS-TAINED 17-YEAR HIGHS. Other Oils PETROCHEMICAL FEED-STOCKS SUS
43、TAINED SOLID GROWTH IN 2017. 0.000.250.50JFMAMJJASONDmillionb/dResidual fuel oil deliveries5year range 2018 2017Fuel oil returned to seasonally-normal levels in January3.54.04.55.05.5JFMAMJJASONDmillionb/dDeliveries of other oils5year range 2018 2017PetChem feedstocks spur a new record high30507090J
44、an17 Jul17 Jan18dollarsperbarrelCrude oil pricesWTI BrentThe discount of WTI to Brent crude oil narrow ed in January as U.S. exports rose4 al market fundamentals. Brent crude oil traded as an average premium of $3.50/Bbl. in February, down from $5.38/Bbl. in January and $6.50/Bbl. in December. The s
45、hrinking of the price dierennullal was consistent with rising U.S. crude oil exports. Separately, composite natural gas liquids (NGL) prices remained above $8.00 per million BTU in January for the 3rd consecunullve month, which oered further corroboranullon with indicators that highlighted strong re
46、finery and petrochemical demand. MACROECONOMY EQUITY MARKET TREMORS THREATEN SOLID UNDERLYING ECONOMIC GROWTH Global economic growth appeared to be poised for another strong year. Based on individual country growth rates reported by the IMF, global GDP growth in 2017 was 2.9 percent y/y on a market
47、exchange rate basis, on par with the average for the past 20 years, and could expand by another 2.9 percent y/y in 2018. The Bureau of Economic Analysis reported that U.S. economy grew at a seasonally adjusted annualized rate of 2.6 percent in Q4 2017, which slipped from a pace above 3.0 percent in
48、Q2 and Q3. The EIA and Bloomberg consensus expect 2018 U.S. real GDP growth of 2.5 percent and 2.6 percent, respecnullvely, which due to U.S. tax reform were upgraded from esnullmates made in Q4 2017 of around 2.2 percent. Leading indicators of economic growth connullnued to suggest expanding busine
49、ss condinullons. The Insnulltute for Supply Managements Purchasing Managers Index (PMI) registered 59.1 percent in January, a decrease of 0.2 percentage points from the seasonally adjusted December reading of 59.3 percent but snullll strongly indicanullve of expansion. Comments from the panel reflected business growth, with new orders and producnullon maintaining high levels of growth; employment expanding but at a slowing rate; order backlogs increasing
