Wednesday, June 13, 2018

Distillate Fuel -- An Observation -- June 13, 2018 -- Most Extraordinary Graphic

Just moments ago I posted this:
Weekly petroleum report, link here:

  • down a lot more than expected
  • down 4.14 million bbls
  • now at 432.4 million bbls
  • WTI immediately after report -- up 25 cents/bbl -- now at $66.54
  • refinery operating capacity way up: 95.7% -- highest I've seen in a long time
  • gasoline production crept up slightly; I use "10 million bbls/day" as the benchmark; most recent data, up to 10.5 million bbls/day
  • distillate fuel production crept up slightly; I use "5 million bbls/day" as the benchmark; most recent data, up to 5.1 million bbls/day
I thought that was a "positive" report regarding distillate fuel -- production actually crept up slightly, and was very slightly above my "benchmark."

But then this. This is an incredible graph. A huge thanks to John Kemp for spotting this:

I have opined many times that if I had but one metric to follow to judge the health of the US economy, it would be amount of gasoline consumed.

Now, without question, I would argue that if one had but one metric to follow the industrial activity of the US, the one metric to use: distillate fuel consumed. 

The Bakken is booming again. The Permian is on fire. And I often forget to mention it bu the Eagle Ford is doing very, very well.

In addition, all the new petrochemical activity and new construction going up along the Texas - Louisiana gulf coast.

This "stuff" all uses a lot of diesel fuel.

From the EIA:

And look at this. John Kemp predicted this seven months ago:

Can anyone say, "synchronized global economy"?

I wrote that last line before I read the John Kemp article. Here are the last three paragraphs of that article:
While some distillate fuel oil is still used for heating, most is used in the high-powered engines used to move freight and industrial machinery so demand is closely linked to the business cycle and trade.
With nearly all regions of the global economy experiencing a synchronized economic expansion and world trade volumes are growing at the fastest rate for six years, distillate demand is growing rapidly.
The global economic expansion and trade upturn are expected to continue boosting demand even further in 2018/19 unless there is a major macroeconomic, financial or trade shock.

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