US Gasoline Demand Hits a Plateau
July 28, 2021
The API inventory report had crude stocks down big with a draw of 4.73 million barrels. Gasoline stocks were down a big 6.226 million barrels and distillates were down 2.2 million barrels.
Bloomberg estimates for today’s DOE inventory report are looking for crude oil to be down 2.371 million barrels, gasoline down 826,000 barrels and distillates down 661,000 barrels.
The market continues to waver and trade in a range as traders battle it out between those who see demand growth impacted by the rise in the number of coronavirus cases and those that see tight supplies continuing to support prices. This sentiment is echoed by Phil Flynn, a senior analysts at Price Futures Group who said, the problem right now seems to be the Delta variant of the coronavirus which is holding the market back even though all the evidence right now suggest a dramatic tightening of supplies.
The UK reported the highest number of deaths and hospitalizations with COVID since March.
The International Monetary Funds maintained its 6% world economic growth rate for 2021, raising its outlook for wealthy economies but cutting estimates for developing countries struggling with the rising infections and low vaccination rates.
From Standard Charter, “While transportation demand is still improving in many countries, demand-flattening has started in some key consumers and conditions deteriorating in others.”
Reuters reports gasoline demand in the United States and Europe is hitting a plateau, and those two regions account for roughly a third of global petroleum, making them the key to the rebound in oil and refining markets.
The estimate for propane inventory today is for it to be up 1.97 million barrels. The five-year average for this reporting week is a build of 1.824 million barrels. If we get another build better than expectations, it may give the market the idea that the fundamentals for propane are improving and could ease price concerns a bit. But to get to a “normal” level prior to winter there is still a large number of barrels that need to get built. Where exports level goes will play the biggest role in where inventory levels are headed. The US needs to see prices go higher to keep stocks here and if they do not then barrels will be exported out of the US to more profitable markets.