U.S. exports of distillate fuel reached a monthly record of 1.4 million barrels per day (bbl/d) in July, and averaged more than 1.3 million bbl/d during third-quarter 2013 (September is the last month for which export data are available). This level is up 30% from 1.0 million bbl/d during third-quarter 2012 and from 0.3 million bbl/d during that period in 2007 (Figure 1).
Continuing growth in global distillate consumption has encouraged exports, which have supported high levels of U.S. refinery runs and increased backwardation (when future prices are lower than prompt prices) during the past two summers on the New York Mercantile Exchange (Nymex) heating oil futures curve.
Global distillate demand, which the International Energy Agency (IEA) expects to be 27.0 million bbl/d in 2013 (measured as gasoil/diesel demand, a category similar to EIA's distillate fuel), has been a key component of the growth in global liquid fuels demand following the 2008-09 global recession. After declining briefly in 2009, gasoil/diesel demand will have increased 2.4 million bbl/d (10%) from 2009 through year-end 2013, according to the IEA. Almost all of this growth was driven by economic expansion in the emerging economies of the non-OECD countries. Distillate fuel use tends to be highly correlated with economic growth, especially in manufacturing. Despite strong global growth, U.S. distillate consumption slumped in recent years, with 2012 annual consumption at 3.7 million bbl/d, a 460,000-bbl/d decline from 2007. Distillate consumption declined as a result of fewer heavy-duty truck miles traveled, along with fuel efficiency gains in the rail and marine vessel fleets. U.S. distillate consumption rose modestly during the first three quarters of 2013 and is expected to average 90,000 bbl/d more for full-year 2013 than in 2012.
This global distillate demand growth has helped support U.S. refinery runs. U.S. refiners increased distillate exports in recent years partly because of the smaller domestic distillate market; however, exports have increased by more than demand has declined, and even with modest U.S. demand growth in 2013, exports have continued to increase. Increased distillate exports reflect the competitive advantage of U.S. Gulf Coast refiners, which have supplied almost 80% of U.S. distillate exports during the first nine months of 2013.
Among Gulf Coast refiners' competitive advantages are the region's access to competitively priced natural gas and crude oil inputs; significant coking capacity to produce more high-value products from a barrel of crude; and easy access to Latin American markets, which are short of distillate fuel. On the back of these advantages, U.S. refinery gross inputs averaged 16.3 million bbl/d during third-quarter 2013, with inputs exceeding 16.5 million bbl/d for the week ending July 12, the highest of any week since 2005. Likewise, refinery utilization has averaged almost 88% in 2013, up from an average of 86% for the five previous years.