The People of America's Oil and Natural Gas Indusry

January MSR: Oil Scores Perfect ‘10.2’

Dean Foreman

Dean Foreman
Posted February 16, 2018

U.S. crude oil production scored a perfect “10” in January – make that 10.2, to be precise, as in 10.2 million barrels per day (mbd). That record production, combined with a new high for refinery throughput and 6.3 mbd of crude oil and refined product exports, narrowed the price difference between U.S. and international crude prices last month and underscored the global impact of U.S. energy. All of this data and more may be found in API’s Monthly Statistical Report for January, free of charge. Highlights:

Record output – January’s crude production is the highest monthly output on record, an increase of 15.1 percent from January 2017. Natural gas liquids (NGL) production, a co-product of natural gas production, sustained near-record output in January at 4.0 mbd, which was an increase of 18.4 percent versus January 2017.


On demand – U.S. petroleum demand, as measured by total domestic petroleum deliveries, rose to 20.3 mbd in January, which was the highest level in more than a decade and an increase of 5.5 percent compared with January 2017. Refined product highlights:

  • Consumer gasoline demand rose by 3.0 percent year-over-year (y/y) to 8.8 mbd, which reflected how increases in economic growth and income have trumped the rise in crude oil and gasoline prices.
  • With indicators of solid industrial activity and freight transportation, January distillate demand eclipsed 4.1 mbd, which was up by 9.0 percent compared with January 2017 and a marked reversal of three years of declines for January.
  • Residual fuel oil decreased by 38.3 percent versus January 2017 despite cold winter weather, suggesting increased natural gas substitution.
  • “Other oils” – liquid petrochemical feedstocks, naphtha and gasoil – demand hit 5.5 mbd; this was the highest monthly demand on record and second highest share of total monthly deliveries since 1965. 


Total inventories up – Total crude and refined product inventories remained atop the five-year range in January. However, crude oil inventories in January were down 17 percent y/y and 1.0 percent month-over-month placing them in the middle of the five-year range.


Refinery utilization strong – The refinery utilization rate in January was 92.4 percent – the strongest January utilization rate on record.  In January, total refinery gross inputs rose by 3.8 percent y/y to 17.1 mbd for the strongest January throughput on record. Gasoline, distillate and jet fuel production each set new monthly records in January.


With the strong growth in U.S. production and exports, coupled with ample inventories, the recent increase in crude oil prices pointed toward strong economic and oil demand growth.  This is corroborated by myriad economic indicators, from the freight shipments and the ISM Manufacturing Purchasing Managers’ Index (PMI), to airline revenue passenger kilometers, the U.S. employment situation, consumer sentiment and financial market performance.  

The recent rise in oil and natural gas production follows with a lag between most drilling and production. According to current reports from Baker-Hughes, Inc., the U.S. rig count averaged 921 rigs during Q4 2017, down from 946 rigs during Q3 2017. So far through Q1 2018, the rig count has risen to 975 – its highest level since April 2015 – and should position U.S. production for continued growth and reinforcement of the increasingly pivotal role that U.S. energy plays in global markets. Watch this space concerning the evolution of competition among international crude oil and refined product markets.


Dr. R. Dean Foreman is API’s chief economist, specializing in energy and global business. With a Ph.D. in economics from the University of Florida, he came to API from Saudi Aramco Strategy & Market Analysis in Dhahran, where he managed short-term market monitoring and the long-term oil demand outlook. Foreman has more than 20 years of industry experience in corporate strategic planning, forecasting, finance / risk management and regulatory policy at ExxonMobil, Talisman Energy and Sasol North America.