Gasoline Demand Supports Price
- Gasoline reaches record consumption of 9.8 million barrels daily
- Analysts call for U.S. gasoline demand peak in 2018
- Gasoline exports at upper end of typical send-out
- Natural gas storage exceeds 3 Tcf.
The Matrix
Additional ramifications of burgeoning American crude oil supply are now being revealed. Gasoline has benefitted because of record domestic demand and a major expansion of exports. Weekly demand of 9.8 million barrels daily for the week ending July 28 continues a pattern of record and near-record demand since May 2017.
Ironically, high gasoline demand comes at a time when analysts are calling for a peak in 2018 U.S. gasoline demand and a global top in 2021. The rationale for a top reflects expectations for a major shift in the composition of the automotive fleet. Hybrid and electric cars should contribute to heightened efficiency, notwithstanding an increase in the fleet size. One projection of global gasoline demand at its 2021 peak is 25.9 million barrels per day—about one-fourth of global oil demand.
Current demand for gasoline in the United States has contributed to a rather steep decline in domestic inventories. Gasoline stock reached 257 million barrels late in January 2017. Subsequently, supplies fell. Most recently, inventories stand at 228 million barrels. Stocks have fallen by 11%.
Gasoline stocks have also been reduced by the remarkable growth in exports. The latest weekly data show a send-out of 512,000 barrels daily. This is below the high export of 1.449 million barrel daily recorded at the end of 2016. It is, nonetheless, at the upper end of typical exports since 2011.
Exports of gasoline are in line with total exports, which have exploded in recent years. EIA notes that “U.S. crude oil and petroleum product gross exports have more than doubled over the past six years, increasing from 2.4 million barrels per day in 2010 to 5.2 million barrels per day in 2016.”
Crude oil exports were permitted starting in December 2015. Calendar year 2016 saw U.S. crude exports at 520,000 barrels daily. The most recent export data show 702,000 barrels daily sent out in July 2017.
Supply/Demand Balances
Supply/demand data in the United States for the week ending July 28, 2017, were released by the Energy Information Administration (EIA).
Total commercial stocks of petroleum increased 1.1 million barrels during the week ending July 28, 2017.
Draws were reported in stocks of gasoline, fuel ethanol, distillates and residual fuel. Builds were reported in stocks of K-jet fuel, propane and other oils.
Commercial crude oil supplies in the United States decreased to 481.9 million barrels, a draw of 1.5 million barrels.
Crude oil supplies decreased in three of the five PAD Districts. PADD 2 (Midwest) crude oil stocks declined 0.4 million barrels, PAD District 4 (Rockies) crude stocks retreated 0.2 million barrels and PADD 5 (West Coast) stocks fell 2.9 million barrels. PAD District 1 (East Coast) crude oil stocks increased 0.1 million barrels and PADD 3 (Gulf Coast) stocks rose 1.7 million barrels.
Cushing, Oklahoma, inventories were unchanged from the previous report week at 55.8 million barrels.
Domestic crude oil production increased 20,000 barrels daily to 9.430 million barrels per day from the previous report week.
Crude oil imports averaged 8.253 million barrels per day, a daily increase of 209,000 barrels. Exports fell 328,000 barrels daily to 702,000 barrels per day.
Refineries used 95.4% of capacity, an increase of 1.1 percentage points from the previous report week.
Crude oil inputs to refineries increased 123,000 barrels daily. There were 17.408 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, rose 210,000 barrels daily to 17.766 million barrels daily.
Total petroleum product inventories saw an increase of 2.6 million barrels from the previous report week.
Gasoline stocks decreased 2.5 million barrels; total stocks are 227.7 million barrels.
Demand for gasoline rose 22,000 barrels per day to 9.842 million barrels daily.
Total product demand decreased 699,000 barrels daily to 20.591 million barrels per day.
Distillate fuel oil supply fell 0.2 million barrels to 149.4 million barrels. National distillate demand was reported at 4.140 million barrels per day during the report week. This was a weekly decrease of 235,000 barrels daily.
Propane stocks rose 1.7 million barrels; total stocks are 67.6 million barrels. Current demand is estimated at 904,000 barrels per day, a decrease of 296,000 barrels daily from the previous report week.
Natural Gas
According to the EIA:
Weekly net injections are lower than the five-year average. Net injections into storage totaled 20 Bcf for the week ending July 28, compared with the five-year (2012 – 2016) average net injection of 44 Bcf and last year’s net withdrawals of 3 Bcf during the same week. The smaller-than-average net injections this week likely resulted from the warmer-than-normal temperatures in most of the Lower 48 states and increasing cooling demand for natural gas.
Working gas stocks total 3,010 Bcf, which is 87 Bcf more than the five-year average and 279 Bcf less than last year at this time.
Working gas levels topped 3,000 Bcf for the first time since the start of the 2017 refill season. Working gas stocks climbed past the 3,000 Bcf threshold for the first time since January 6, 2017. This is only the third time that working gas levels exceeded this threshold this early in the refill season. Prior to 2012, working gas stocks typically did not pass this threshold until September.
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