Domestic petroleum deliveries—a measure of demand, dropped 4.3 percent in May from a year ago as the economic downturn continued to take a toll on freight transportation and air travel, the American Petroleum Institute reported in its latest Monthly Statistical Report.

At 18.89 million bpd, oil deliveries for May were at their lowest level since 1999.

API reported that “with the string of year-over-year declines that has continued without interruption since mid-2007, January-May petroleum deliveries sank to a level fully 8.5 percent lower than for the same period four years ago, when they reached a high of 20.7 million bpd.”

Gasoline demand for May edged up 0.6 percent versus 2008 levels, however, all other product deliveries continued lower. Demand for distillate fuel oil, including diesel and heating oil, dropped 7 percent from May 2008 “reflecting the recession’s greater impact on the demand for freight transportation.” Jet fuel deliveries slid nearly 9 percent and residual fuel oil demand plunged more than 35 percent for the month reviewed.

Domestic crude oil production, at 5.3 million bpd, continued to show year-to-year gains in May, with the 4.4 percent increase for the year-to-date weighing in as the largest since the Alaska North Slope came on stream in the late 1970s, API said. Increased crude oil production from the offshore Gulf Coast has accounted for a significant part of that increase, however, nearly one-third of the additional production so far in 2009 for the U.S. as a whole has taken place in North Dakota. With the application of technological advances to the Bakken shale formation, crude production in N.D. surged 47 percent during January through May of this year compared with a year ago—placing the state among the top five producing states in the country behind Louisiana, Texas, Alaska, and California.

“It’s been a dramatic increase for that state and one that accounts for nearly a third of the entire increase in U.S. crude oil production this year,” said API Statistics Manager Ron Planting.

According to the data, distillate production for May dropped 6.1 percent from a year ago, while jet fuel output tumbled nearly 9 percent. Gasoline production for the month reviewed climbed 1 percent, with year-to-date gasoline output averaging 8.8 million bpd—the second highest level ever for the time period.

Refinery capacity utilization averaged 82.5 percent in May, down about 6 percentage points from year-ago levels, “not surprising given the weak oil products demand, but refiners’ utilization rates are much higher than other manufacturing sectors,” said API.

According to the Federal Reserve, manufacturers across all industries averaged just 65.8 percent of capacity in April, which is the latest data available, down 11 percentage points on the year. May’s refinery run rate however, was the highest monthly rate since December 2008.

API reported U.S. petroleum imports in May totaled 11.5 million bpd—the lowest for the month in nine years and a drop of 10.4 percent from a year ago reflecting both weak domestic demand and increased domestic oil production. Products imports slid 17 percent from May 2008 levels to 2.658 million bpd. At 8.83 million bpd—a level not seen since 2003 except for the hurricane-related disruption in September 2008—crude oil imports for the month reviewed tumbled 8.2 percent from a year earlier.

Crude oil inventories, which had been rising steadily since last July, reversed direction in May with a draw of more than 12.0 million bbl—which took supply from April’s 29-year high of 374.0 million bbl to 361.0 million bbl. At the current level, crude supply remains higher than any seen since the 1990s.

The slowdown in demand weighed more heavily on distillate inventories than the decline in refinery production for the month, with inventories rising 5.0 million bbl to 151.0 million bbl—the highest for any month since December 1998. Inventories of ultra-low sulfur diesel reached a new high of over 90.0 million bbl. During May, gasoline supply fell a counter seasonal 8.0 million bbl to 205.5 million, or about 2 percent below the five-year average for the month.