Weak Distillates Demand on Falling US Manufacturing Activity

US manufacturing and freight activity has declined for six months running and is reflected in falling consumption of distillates as well as industrial electricity sales.

• Manufacturers reported another widespread downturn in April with ISM composite manufacturing index at 47.1. These levels have coincided with a significant mid-cycle downturn in industrial activity or a cycle-ending recession in the past according to Reuters.
• Manufacturing output is closely correlated with consumption of distillate fuel oils and industrial electricity use suggesting significant reductions in energy consumption.
• The volume of distillates supplied fell in six of the seven months between August 2022 and February 2023 compared with the same months a year earlier. Distillates supplied was down by almost 5% between December 2022 and February 2023.