Gasoline demand: after talking about this for the past few weeks, the story is finally getting national press. I have noted the drop in gasoline demand on several occasions; this might be the most recent and one of the better posts. From the first tweet from Reuters that I saw this morning: US refiners face weakening demand at pump for first time in five years.
U.S. refiners are facing the prospects of weakening gasoline demand for the first time in five years, stoking fears that earnings this year may be even worse than the dismal performances seen in 2016.
The sign of weakening U.S. gasoline demand comes as U.S. refiners are in the midst of reporting their worst year of earnings since the U.S. shale boom started in 2011. The oil boom turned to bust in 2014, and U.S. independent refiners reaped the profits as plunging pump prices and a growing economy helped fuel a surge in demand.
U.S. refiners amassed large inventories that punished margins last year, but record gasoline demand and robust exports helped provided a firewall against further slippage. Now the industry faces the prospects of higher crude prices following global production cuts and fresh federal data that suggests their gasoline demand safety net may be eroding.Other data points from the article:
- gasoline use has grown every year since 2012
MPC, PSX, and VLO execs all acknowledged weaker-than-expected seasonal volume in earnings calls this past week; all anticipated strong demand to return
crude runs, meanwhile, are at historic levels, up roughly 300,000 bpd over last year
refiners must sell off winter-grade gasoline; thus, inventories are not likely to linger
This is what I posted February 2, 2017, (linked above):
Gasoline Demand -- A Most Under-Reported Story
Comments later; two graphics:
Another reader is also stymied, noting:
I first looked at it last night, and couldn't decide what it meant, and have no further conclusions this morning.Meanwhile, from John Kemp via Twitter, gasoline stocks rising faster than ever:
Only 4 years of the last 18 years have a 3 week period where it's been so low: 2000, 2007, 2012, and 2014.