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What Recovery? Petroleum Deliveries Lowest Since September 2008; Weakest July Demand Since 1995

Tyler Durden's picture




 

While the Achilles heel to the endless "economic data" BS coming out of China may be its electric production and demand, both of which show a vastly different picture than what the Beijing politburo's very wide brush strokes paint, the US itself is not immune from indicators that confirm that anything the BEA dishes out should be taken with a grain of salt. One data set that we showed recently that paints a drastically different (read slowing) picture of the US economy which we noted recently is railcar loading of waste and scrap for the simple reason that "The more we demand, the more waste is generated by that production." Of course, the propaganda manipulation machinery only focuses on the "entrance" of production, and completely ignore the "exit." But an even far more important metric of the general health of the US economy may be none other than broad energy demand, in the form of petroleum deliveries and gasoline demand. If this is indeed the relevant metric to observe, then things are about to get far, far worse. As Dow Jones notes: "U.S. petroleum deliveries, a measure of demand, fell by 2.7% in July from a year earlier to the lowest level in any month since September 2008, the American Petroleum Institute, an industry group, said Friday." It gets worse: "Demand in the world's biggest oil consumer, at 18.062 million barrels a day, was the weakest for the month of July since 1995, the API said. Year-to-date demand is down 2.3% from the same period in 2011."

Did Americans forget to drive?

Demand for gasoline, the most widely used petroleum product, dropped 3.8% from a year earlier, to 8.624 million barrels a day, the lowest July level since 1997. Gasoline use in the heart of the peak summer driving season was 2.2% lower than in June. January-July gasoline demand averaged 1.1% below a year earlier, at 8.671 million barrels a day, the API said.

Oh well, maybe Americans just decided to take the peak driving period of the summer season off for some reason. Demand for other distillates would still be high... assuming the economy was chugging along. Yes. And no.

Kerosine-based jet fuel use fell 0.8% in July from a year ago, to 1.455 million barrels a day, while demand for heavy residual fuel, used in power plants and industrial burners, dropped 7.1% year-on-year, to 294,000 barrels a day.

One would think that with collapsing demand, for whatever reason, the production side would slide as well, especially since the price of WTI is soaring and is back to just shy of $100, causing the Margin Hiker-in-Chief to grumble. One would be wrong.

Production of all four major products--gasoline, distillate, jet fuel and residual fuel--was greater than demand for those products. As a result, petroleum imports decreased and exports increased. Total imports of crude and refined products fell by 9.6% to average 10.4 million barrels a day in July. Exports of refined products increased 11.1% to a record high for July of 3.244 million barrels a day, and year-to-date exports were up 14% compared with the same period in 2011.

 

Refineries operated at 92.7% of capacity in July, the second month in a row above 90%.

 

Crude oil production rose 13.6% year on year in July to 6.225 million barrels a day, the highest July level since 1998. Year-to-date output averaged near the July level and was up 11.9% from the same period in 2011.

But, how is it possible than in light of collapsing demand in the world's marginal consumer of gasoline, that crude prices are not only flat, but have in fact entered a bull market in the past 3 months? Simple: we wrote about it in "Monti's bluffing unleashes bull market in crude."

What was the bluffing? Simple - that no matter what happens, Draghi will print. At least now we know who all those 'evil speculators' are that Obama bashes every time unleaded approaches $4.00 and Brent reaches fresh record highs in EUR terms. Such as now.

As for what all this means for the economy, the API chief economists summarizes it best.

"While retail sales for July are up and housing has improved, the weak petroleum demand numbers are a strong indication the economy is still faltering," said John Felmy, API chief economist. "Unfortunately, achieving robust growth will likely continue to be an uphill climb given the nation's fiscal challenges, business uncertainty, and a European economy in jeopardy of sliding back into recession."

It also means fresh all time highs in the S&P. Why? Because.

From API:

 

 

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Fri, 08/17/2012 - 17:23 | 2715424 abgary1
abgary1's picture

Who is buying the refined products?

 

Fri, 08/17/2012 - 17:24 | 2715429 ejmoosa
ejmoosa's picture

If you think petroleum demand is down, wait until you examine the electricity numbers by region, heat waves or not...

Fri, 08/17/2012 - 17:44 | 2715485 Yen Cross
Yen Cross's picture

 When I turn one of those Chinese container ships into a floating sovereign island, can we negotiate a "10 year" fuel oil contract?

 http://www.bloomberg.com/quote/BDIY:IND

Fri, 08/17/2012 - 17:51 | 2715503 uOptOut
uOptOut's picture

Yeah but demand for petroleum JELLY is gonna skyrocket when the sheeple find themselves bent over for TBTF banksters

Fri, 08/17/2012 - 22:24 | 2716007 ZeroAvatar
ZeroAvatar's picture

Most of us have probably already stocked a lifetime supply.

Fri, 08/17/2012 - 18:03 | 2715540 abgary1
abgary1's picture

Exports were up 14%. Who buying?

Fri, 08/17/2012 - 18:12 | 2715564 Yen Cross
Yen Cross's picture

 Exports were up 14%. Who buying?                       The FUZZY MATH {PBoC} was silly!

Sat, 08/18/2012 - 09:44 | 2716394 CrashisOptimistic
CrashisOptimistic's picture

The folks buying are the folks whose refineries can't deal with the poor quality oil increasingly becoming the only stuff available.  The US has refineries that can deal with Venezuelan tar.  Most don't.

This is why exports were up.  

Just get past the gobbledygook of gasoline products and imports and exports of it.  All that matters is crude oil.  Not all liquids.  Crude.

Only crude has 5.6 million BTUs per 42 gallon barrel.  Only crude brings food to your store shelves.

So when looking at imports, exports, consumption and whatever, only crude matters.  The rest is hand waving.

Fri, 08/17/2012 - 19:07 | 2715684 CoolBeans
CoolBeans's picture

No jobs. 

No unnecessary spending for those who fear losing a job they have. 

No money for shopping all over town - wear what you have, share or visit a consignment shop.

No money for extra food stuffs (basics and for food storage only, if possible)

Let's see, a gallon of milk for the kids or a gallon of gas?  Kids win, easy. 

No money to go to the movies / sports games / etc.

No unncessary trips

Vacation close to home or stay at home

School?  Car pool or bus

Can't afford to fix the old car?  No travel.

New car?  Yeah, they might give a loan - but who will pay the insurance?  No funds for gas after insurance is paid.

Hello?  Things are bad out there.  If only some folks in their ivory towers (or a white house) would figure out that people who aren't working and people who are scared - spend very little.  Duh. 

I don't know of any person who isn't at least a little terrified...either their lives as they know it have changed...or they live under that threat.

Fri, 08/17/2012 - 23:27 | 2716068 Totentänzerlied
Totentänzerlied's picture

Don't take this the wrong way but, keep dreaming. Stores are not empty, shops are not empty, roads are not empty, restaurants are not empty. Down off the insane highs of the bubble years, yes, but utterly destroyed, no - not just yet.

I didn't think we would make it this far either, I have no idea how these people are affording all of this, but it is what I see and hear.

Personal highly unbelievable but true anecdote: Parents are nearing retirement age, one has almost no pension, other (stepparent) has major continuing monthly expenses well above and beyond the norm (child support, alimony, ex-wife's house's mortgage [I kid you not!], and [first marriage] kids' college tuitions), their wages are frozen and they may be getting furlowed soon. So what do they do? New car, three week vacation to Italy, now planning one to the UK. They still drive as if it was the 1960s. My jaw dropped when I heard talk of iPhones.

The consumer has far still to fall, and will continue acting like a trophy wife on the way down.

Fri, 08/17/2012 - 20:02 | 2715796 MFLTucson
MFLTucson's picture

Since when do facts matter in the land of oz?

Fri, 08/17/2012 - 21:50 | 2715965 Yen Cross
Yen Cross's picture

    Which OZ?, The { perennial} monetizing of ( A$) , or the bi-product of  [U.S.],  "Aircraft Carrier " status?

Fri, 08/17/2012 - 20:25 | 2715828 orangegeek
orangegeek's picture

Oil is completing its counter trend rally - wave 2 up.

 

Wave 3 will follow.

 

http://bullandbearmash.com/chart/spot-wti-oil-daily-august-17-2012/

Fri, 08/17/2012 - 22:28 | 2716008 ZeroAvatar
ZeroAvatar's picture

Boy, I tell ya, you guys got a wave for everything!

 

Sorry, orangegeek, Elliot Wave Theory is the second biggest hoax ever perpetrated on mankind.

Sat, 08/18/2012 - 09:33 | 2716383 Biosci
Biosci's picture

Damn!  I don't know whether to believe you until I know what you think the biggest hoax is!

(Ok, I believe you regardless, but I'm still curious)

Fri, 08/17/2012 - 20:34 | 2715834 smiler03
smiler03's picture

ZH is the only honest news source to put real world news into context and show that it's actually bad news. Here for example we have climate adjustments to any "good news" and actually show that it's "bad news". In fact the strength of ZH to pick "bad news" out of the never ending BS "good news" is excellent.

I therefore suggest a new 'ZH Destruction of "good news" to "bad news"' index. Perhaps then we can actually get some idea of whether this weeks bad good news is actually better than this weeks good bad news.

I for one would feel even wiser than before.

Sat, 08/18/2012 - 07:51 | 2716319 Element
Element's picture

If you want to pick bad news

http://www.financialarmageddon.com/

Fri, 08/17/2012 - 20:39 | 2715845 vertexa
vertexa's picture

"One of the nation's top credit rating agencies will begin a wide-ranging review of municipal finances in California because of what it sees is a growing threat of increased city bankruptcies and bond defaults.

Moody's Investors Service issued a report Friday saying that the growing fiscal distress in many cities in the nation's most populous state was putting bond holders at risk.

It noted that some municipalities were considering bankruptcy as a new strategy to address budget deficits and avoid obligations to bond holders. That emerging dynamic could have ripple effects throughout the investment community.

Three California cities have filed for bankruptcy this year: Stockton, San Bernardino and Mammoth Lakes.

Moody's says it expects "more bankruptcy filings and bond defaults among California cities reflecting the increased risk to bondholders ...""

Fri, 08/17/2012 - 22:31 | 2716015 ZeroAvatar
ZeroAvatar's picture

Yessir, L.A.'s next on the list.  If the tsunami doesn't get 'em first.

Fri, 08/17/2012 - 20:59 | 2715870 ATG
ATG's picture

Meanwhile Kudlow has been huffing higher retail sales and TNX as a sign of economic recovery.

Now where were those green shoots he hyped from 2008?...

Fri, 08/17/2012 - 21:03 | 2715875 ATG
ATG's picture

OT:

Has anyone else been wondering about those West Nile Virus outbreaks from ME to CA?

Aerial spraying is safe, eh?

Moonbeam knows about that.

Funny, he's back in office...

Fri, 08/17/2012 - 22:11 | 2715988 Yen Cross
Yen Cross's picture

 Not really. It's a 30% mortality rate.  I have a jet to catch Sunday. "Dengue Fever" is my mantra!

   I can always go "Discovery Channel"  Wildman ? Death by " amoeba"?

Fri, 08/17/2012 - 22:38 | 2716018 ZeroAvatar
ZeroAvatar's picture

I've always said some form of plague or disease will be the next population reducer. 

 

West Nile is nasty stuff.  Wear long sleeves, slacks, bug spray if you HAVE to be outdoors (it's poisonous to US, too), and BE CAREFUL!

 

Ebola is also on my watchlist.  {Freaking mosquitos!  Hypodermic needles with wings!}

Sat, 08/18/2012 - 11:21 | 2716528 Red Raspberry
Red Raspberry's picture

It's only the females.....

Sat, 08/18/2012 - 08:36 | 2716346 new game
new game's picture

what i don't understand is why posters are still playing the game...

you pepetuate the very thing you abore

i'm here to learn something from smarter posters TIA

like any casino the parking lot is full.

humans will never change.

Sat, 08/18/2012 - 09:40 | 2716391 roadhazard
roadhazard's picture

Peak oilers = lol, you clowns run up the price of a barrel of oil just running your mouths. 911 ! 911 !

Sat, 08/18/2012 - 09:55 | 2716400 tony bonn
tony bonn's picture

speculation plays a huge role in the high price of petroleum and the recent embargo against iran isn't helping.....finally, with refineries at 90% + capacity, any hopes for declining gasoline prices are preposterous...the next time you see high gasoline prices think dimon, blankenfein, and bankster

Sun, 08/19/2012 - 00:06 | 2717584 MoneyMagician
MoneyMagician's picture

Meh, it's just inflation. When you print money, you damage money as a unit of account. When you have money printing, and let loose the dam of extra money supply, you create speculation on the price of a commodity. Just like a credit card user who knows he can't pay back the debt, he will max out his credit and go out with a bang with no intention of paying back. For people who want to hedge against inflation, based on expectation of future inflation, and easy money, bad fiscal policy, and monetary, you make people want to speculate on the true value of oil, which is a finite commodity, and expect higher prices in the future. You know like the housing bubble. You just bought a house and sit on it, for easy riches in the future. When government borrows more than it pays back, and central bank cheapens credit, sides with the borrower, the common sense thinks inflation. Policy these days is about creating inflation, without panicking too much of the people, instead of price stability. Push the pedal to the metal. Then you compound it with geopolitical events like Iran, or China importing more oil, refineries, or whatever, you not only unstable oil prices, you get rising oil prices.

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