What accounts for the Saudi seasonal demand swing? Breaking down monthly demand by key product category sheds some light on this question. Neither liquefied petroleum gas, gasoline, nor jet fuel/kerosene shows any significant cyclical demand growth in summer; in fact, demand for both LPG and jet fuel/kerosene peaks in winter. Three other categories account for all summer demand growth: middle distillates (gas/diesel oil), residual fuel oil, and a third category made up of other products and crude oil used for direct burning - all mostly boiler fuels used in thermal power generating units. Estimates for the last category are implied numbers - the difference between "total products" demand and the sum of demand for all main products (LPG, gasoline, jet fuel/kerosene, gas/diesel oil and residual fuel oil) - rather than reported measurements. Seasonal shifts in demand in all three categories seem to reflect the underlying seasonality of air-conditioning demand. Since 2002, the swing in reported Saudi gas/diesel oil demand (from trough to peak) ranged widely, from 90,000 bbl/d in 2002 to 445,000 bbl/d in 2010. In residual fuel oil, the swing in demand widened from 90,000 bbl/d in 2002 to 260,000 bbl/d in 2008, but subsequently narrowed back to 90,000 bbl/d in 2010, presumably as Saudi Arabia phased out the use of residual fuel oil as boiler fuel. The swing in other products and implied direct crude burn is by far the widest, averaging 370,000 bbl/d during 2006-2010, from 130,000-150,000 bb/d in 2002-2005 to 620,000-640,000 bbl/d in 2009-2010. This growth is the main reason why many market participants are worried that rising summer domestic requirements might absorb this year's Saudi production increase and result in few extra Saudi barrels on international markets.
Production and inventory changes, along with exports, are the other components of the Saudi oil balance. Production estimates by the IEA and others do not show any seasonal variation in Saudi crude or natural gas liquid production. Saudi Arabia's own data on crude and product exports reported to the JODI do show some seasonality in exports, but there is no indication that the increasing seasonal swing in summer internal demand has caused the seasonal swing in crude and product exports to widen in recent years. On average, in the last five years, both crude and product exports bottomed out in August, during the peak domestic demand season. Average exports peaked in January for crude and February for products, with average swings of 590,000 bbl/d and 135,000 bbl/d, respectively, between peak and trough.