Houston (Platts)--17Apr2014/117 pm EDT/1717 GMT

The record-low US residual fuel oil demand reached last week was a result decades in the making and perhaps illustrative of more to come as pressure continues to build from increased attention on the environment.

US Energy Information Administration data published Wednesday showed domestic fuel oil demand averaged 154,000 b/d during the week ended April 11, the lowest figure on record since the EIA began tracking the data in 1991.

It was not an anomaly: The 10 lowest weekly demand figures came within the past seven months.

"This is simply a shift in power plants during this 30-year period [since the 1979 US energy crisis] away from heavy [residual fuel oil] toward natural gas and other products and also a shift by refineries to upgrade and maximize high-value products and minimize low-value products," Jim Corbett, a professor at the University of Delaware, said Thursday.

Indeed, electric generation accounted for less than 10% of residual fuel oil demand in 2012. Less than a decade earlier, it was closer to 50%, the latest EIA figures show.

Furthermore, US refiners are pumping out less fuel oil -- which typically sells for less than the crude oil used to produce it -- than ever before. Production last year was the lowest on record.

Fuel oil, now primarily used in the marine transportation industry, should see demand from that market dwindle, too.

Next year, ships traveling within 200 miles of shore in North America and the Baltic and North seas must limit sulfur emissions from fuel to 0.1%, down from 1%, according to International Maritime Organization rules.

"A lot of [the declining demand] has to do with ships as the engines have moved toward diesel or lighter distillates," Global Hunter Securities' Richard Hastings said. "Longer term, there's adoption of more diesel or natural gas."

Global ports expect to see LNG account for 13% of the bunker fuel market supply by 2020 and 24% by 2025, a Lloyd's Register report published this month showed.

As more attention is paid to emissions of harmful pollutants, pressure will continue to build on residual fuel.

"When the US pushes a lower emissions requirement, other countries are going to slowly adopt a similar measure," Hastings said.

"Residual is an artifact from the past," he added.

--John-Laurent Tronche, john-laurent.tronche@platts.com --Edited by Annie Siebert, ann.siebert@platts.com

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