U.S. diesel demand fell to its lowest seasonal level in March since 1998, while crude oil output rose to a multi-month high, data from the U.S. Energy Information Administration showed.
Demand for distillate fuels, which includes diesel and heating oil, has been hit sharply this year under pressure from sluggish manufacturing activity, milder-than-expected winter weather and booming renewable fuel supply.
Products supplied of distillate, EIA’s measure of demand, fell over 6% from February to 3.67 million barrels per day (bpd) in March, lowest for the month since 1998.
The two most immediate U.S. ultra-low sulfur diesel futures contracts HOc1-HOc2 settled in the steepest contango since 2020 on Friday. A market is in contango when prices for commodities are lower now than for future deliveries.
U.S. crude oil output rose by 0.6% to 13.2 million bpd in March, the highest since December, the data from EIA showed. Output from Texas, the top producing state, edged 0.7% higher to 5.6 million bpd in March, also the highest since December.
Production in New Mexico, the second largest producer, grew by 1.6% to 2 million bpd to its highest on record for a second straight month.
Crude production in North Dakota, however, fell by 2.7% to 1.2 million bpd to its lowest since January.
Meanwhile, total product supplied of oil and petroleum products fell0.4% to 19.9 million bpd. Finished motor gasoline supplied rose 3.3% to 8.9 million bpd.
Gross natural gas production in the U.S. Lower 48 states fell by about 3.0 billion cubic feet per day (bcfd) to 114.7 bcfd in March, down from 117.6 bcfd in February, according to EIA’s monthly 914 production report.
That compares with a monthly record 118.2 bcfd in December.
In top gas-producing states, monthly output in March held steady in Texas at 34.6 bcfd, and fell 9.0% in Pennsylvania to 19.4 bcfd.
That compares with monthly record highs of 35.0 bcfd in Texas in December 2023 and 21.9 bcfd in Pennsylvania in December 2021.
Source: Reuters (Reporting by Arathy Somasekhar and Georgina McCartney in Houston, Scott DiSavino and Shariq Khan in New York; Editing by Marguerita Choy)