Americas News
US Fuel Oil Demand Hits Record Low
Demand for fuel oil in the U.S. fell to an average of 154,000 barrels per day (bpd) for the week ended April 11, the lowest level since the US Energy Information Administration (EIA) started tracking the data in 1991, Platts reports.
The weak demand reflects changing dynamics, as power plants move away from heavy fuel oil (HFO) and toward natural gas and other products, while refineries upgrade to produce more high-value product.
The 10 lowest weekly demand figures for fuel oil came within the past seven months.
Marine fuel has become the primary market for fuel oil, with electric generation providing just 10 percent of demand in 2012, compared with around 50 percent less than 10 years earlier.
Now, as ships adjust to new regulations on sulfur emissions in the North American and European Emissions Control Areas (ECAs), maritime use of the fuel is declining.
"A lot of [the declining demand] has to do with ships as the engines have moved toward diesel or lighter distillates," said Richard Hastings, of Global Hunter Securities.
"Longer term, there's adoption of more diesel or natural gas."
Hastings said more countries are likely to adopt rules on emissions, pushing the demand for HFO bunkers down further.
"Residual is an artifact from the past," he said.
Russia has also been moving away from fuel oil and toward more expensive refined products, with the nation's energy ministry saying earlier this year that it wants to reduce fuel oil exports by 65 percent between 2010 and 2035.
