EIA Notes Shift in US Distillate Consumption Patterns
According to the U.S. Energy Information Administration (EIA), distillate consumption in the United States has been notably lower than average in 2024, impacted by a combination of warm winter weather, slow manufacturing activity, and an increasing shift towards biofuels on the West Coast.
In its latest Weekly Petroleum Status Report (WPSR), the EIA highlighted that the four-week average US distillate consumption, tracked via product supplied, has remained below the previous five-year (2019–2023) range for the majority of the year up to April 19, 2024. Distillate fuel oil, which includes diesel used in vehicles and home heating oil, has shown volatile weekly changes, attributed to natural intermittencies in survey collection and external factors like import cargo timings.
Economic indicators tied to distillate fuel consumption also point towards a downturn in economic activity. Industrial production across manufacturing, mining, and utilities sectors saw a decline year-over-year for the second consecutive month in February 2024, with no growth recorded in March. Additionally, the American Trucking Association’s truck tonnage index, which measures domestic freight movement, has also declined, marking a 1% decrease in March 2024 compared to the same month the previous year.
On the West Coast, particularly in Petroleum Administration for Defense District 5 (PADD 5), the substitution of renewable diesel for traditional petroleum distillate continues to reshape fuel consumption patterns. Renewable diesel, which can directly replace petroleum diesel due to its chemical similarities, has seen an increase in usage, supported by clean-fuel programs initiated in 2011. In January 2024, the consumption of combined renewable diesel and biodiesel reached near-record highs, while traditional petroleum distillate consumption dropped to levels not seen since May 1996.
Although renewable diesel only constitutes about 4% of the combined US petroleum and biofuel distillate consumption, the EIA anticipates continued growth in this sector. This trend underscores broader shifts towards alternative energy sources and reflects underlying changes in the US economic landscape.
This article is part of Daily Market News & Insights
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