U.S. Oil demand Dropped for Third Month in November -EIA

U.S. oil demand fell in November from a year earlier, the third straight monthly decline, as warmer temperatures and stagnant industrial activity weighed on distillate demand and low prices failed to boost consumption, government data showed on Friday.

The drop came despite robust growth in gasoline demand due to low prices at the pump, highlighting the extent to which demand, and prices, could remain under pressure due to the warm winter, slower rail traffic and slower industrial production and slower demand from oil drillers cutting back their own activity.

"I don't necessarily think it's been baked into people's balances in the coming year," said Michael Cohen, head of commodities research at Barclays (BCS) in New York. "It could lead to analysts revising their expectations for demand in 2016."

Total U.S. oil demand fell by 182,000 barrels per day, or 0.9 percent compared with the same month last year, U.S. Energy Information Administration data showed on Friday, following a 1.7 percent decline in October and a 0.1 percent drop in September.

That was driven by a 5.5 percent decline in demand for distillates, which includes both diesel fuel and home heating oil.

The warm start to winter, which continued through December and January, has dented heating oil demand and helped push distillate stocks toward more-than five-year highs earlier this month. <DST-STK-1-EIA>

In terms of heating degree days, or the number of degrees a day's average temperature is below 65 degrees Fahrenheit, November was 12 percent warmer than normal, Thomson Reuters data show.

Declines in U.S. drilling activity, itself a function of weak oil prices, were another significant contributor to the drop-off in demand in November, Cohen said. The engines used to power rigs and the heavy trucks used to service the rigs both run on diesel.

Gasoline demand, on the other hand, rose by 188,000 barrels per day in November, or 2.1 percent, as U.S. motorists drove 4.3 more miles compared with the year before, U.S. Department of Transportation data show. Average U.S. gasoline prices hit a 10-month low in November at an average of $2.14 a gallon.

(Reporting By Luc Cohen; Editing by David Gregorio)