Daily Energy Report
US distillate demand low, Russian LNG challenges, Venezuelan sanctions murky, China refinery in Sri Lanka, Libya oil project, Russia warns Kazaks, Biden new building utopia, and more.
Chart of the Day: US Distillate Demand Remains Below Pre-COVID-19 Level
Summary
Figure (1) compares US distillate demand in 2023 and 2024 to pre-COVID demand in 2019. Distillate demand has been decreasing recently and remains well below 2019 levels.
EOA’s Main Takeaway
The EIA published a report that highlighted the main issues: Most of the decline is on the West Coast as the region switched to biofuel. However, low economic growth and a mild winter played a role, too. A warm winter led to a 6% drop in heating oil use, which typically makes up 10-15% of distillate consumption in Q1. Today we learned that the US GDP grew by only 1.6% in the first quarter of this year, which was lower than expected. The most important components of GDP are those that use diesel in the industrial sector. Industrial production in the US has been declining since 2021.
While the decline in distillate demand contributed to the decline of the overall oil demand, even when we add biofuel consumption, US liquids demand remains week, showing that lackluster economic growth.
Story of the Day: (madeira made up most of the story. see explanation below)
Bloomberg: China Pays Less for Venezuelan Oil after US Reimposes Sanctions
Summary
Since the US reimposed sanctions on Venezuela, Chinese refiners are paying less for Venezuelan Merey crude oil, now at a $14 discount to ICE Brent, down from $11 before the sanctions. With the US ending its sanctions waiver, countries like India are avoiding Venezuelan oil, potentially redirecting more barrels to China. Chinese private refiners continue to import Venezuelan crude despite sanctions. Although official imports resumed only recently, data suggests a steady flow over the years.