Annual US gasoline use hits eight-year high, but distillate demand drops

By Jarrett Renshaw

NEW YORK (Reuters) -- US oil demand rose modestly in December from a year earlier, the first rise since August, as warm weather and low prices at the pump boosted driving rates, offsetting lackluster demand for heating oil, government data showed on Monday.

Total US oil demand rose by 87,000 bpd in the nation's warmest December on record, or 0.4% compared with the same month last year, to 19.5 million bpd, the highest for the month since 2010, EIA data showed.

The modest growth was fueled in large part by robust demand for gasoline as low prices at the pump and lower unemployment rates boosted driving rates.

Wallace E. Tyner, an energy economist at Purdue University, said the warm weather and low gas prices propelled more people to drive in December, with some choosing a car over a plane to travel to holiday gatherings.

"I can tell you that I am looking at a family reunion in Maine, an 18-hour drive, and I am thinking of driving," Tyner said. "Gas prices are cheap, but airlines have not dropped prices."

Gasoline demand rose by 203,000 bpd in December, or 2.3%. Average US gasoline prices were $2.04/gal in December, the lowest for the months since 2008, EIA data shows.

Last week, data showed Americans logged 264.2 billion miles on US roads and highways in December, the most ever for the month, according to the US Department of Transportation.

Part of that increase resulted from temporary weather conditions, offering some relief to oil traders who have worried demand was on a prolonged decline. The warm winter, which continued through January, has dented heating oil demand and pushed distillate stocks above five-year highs.

Overall, US gasoline demand was 9.2 million bpd in 2015, the most since 2007, US Energy Information Administration data showed on Monday.

Still, demand for distillates, which includes both diesel fuel and home heating oil, dropped 9% to 3.8 million bpd, the lowest for the month since 2012.