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The American Petroleum Institute (API) says U.S. oil demand for the first seven months of 2008 dropped to its lowest level in five years, according to a report released this week.

In its Monthly Statistical Report, the API said total petroleum deliveries fell by 3.6 percent compared to last year, whilst gasoline deliveries fell by more than 2 percent.

Total imports of crude oil were also down on a year ago, dropping by 3.9 percent for the January-to-July period.

“The weaker demand observed for the first six months of the year continued in July,” said API statistics manager Ron Planting.

“With less demand, we’re importing less oil. However, imports still represent the lion’s share of U.S. consumption. Canada is the largest of our diverse suppliers, providing us nearly as much oil as the total from all of the Persian Gulf nations,” added Planting.

Crude oil imports fell slightly for the first seven months of the year and were 7.4 percent higher in July compared to the same month a year ago. Meanwhile, product imports dropped steeply both in July and in the January-to-July period.

U.S. crude oil production rose by 2.1 percent in July compared to last year. The increase in July production helped bring output levels to within 0.5 percent of the figure reached over the same period in 2007. A rise in oil production in the lower-48 states was said to have been the main reason for the July increase. Output in the state of Alaska fell during the same period.

Total inputs to crude distillation (a measure of refinery activity) was less than 1 percent lower during the first seven months of 2008 compared to the previous year and 1.6 percent down on levels achieved in July 2007.

The report said that due to steady expansion and upgrading of refinery capacity, industry production of the four major products (distillate, residual fuel, gasoline and kerosene jet fuel) reached a record level of 16 million barrels per day, showing a particularly strong rise in distillate production.