USA Diesel and Gasoline Demand Slip
Aug 30, 2023

Across oil-consuming economies, stress lines in oil consumption are continuing to form amid tight product supplies and high pump prices.


That’s according to a new market note from energy and environmental geo-analytics company Kayrros, which highlighted that U.S. diesel demand and U.S. gasoline demand had slipped.


“U.S. diesel demand, which had strongly benefited from online shopping during Covid and had long seemed impervious to rising prices, last week slipped below year-ago levels, in line with recent reports of sagging growth in online orders from major retailers,” Kayrros stated in the note, which was sent to Rigzone over the weekend.


“U.S. gasoline demand shows even clearer signs of losing steam. U.S. passenger road transportation has been exceptionally strong until late May but has remained consistently below last year’s level since around Memorial Day weekend, traditionally seen as the kickoff of the peak driving season,” Kayrros added.


According to a graph outlining on-road diesel consumption in the U.S., which was included in the note and which included data stretching back to 2019, the last time diesel demand slipped below last year’s levels was around the end of April.


According to a graph outlining on-road gasoline consumption in the U.S., which was also included in the note and which also included data stretching back to 2019, prior to the latest stretch of year on year declines, the last time gasoline demand slipped below last year’s levels was also in April.


In the note, Kayrros conceded that the recent slowdown in U.S. end-user gasoline demand growth occurs from a “high baseline” and against the backdrop of U.S. gasoline inventories “reported at seven-year lows”. 


Kayrros also stated in the note that its measurements of end-user gasoline demand had been consistently higher than U.S. official estimates of gasoline deliveries into secondary storage and said tight gasoline inventories appear consistent with Kayrros estimates.


In a separate market note sent to Rigzone earlier this month, Kayrros outlined that the U.S. summer driving season was off to a slow start.


The average price of regular gasoline in the U.S. was $4.655 per gallon on July 12, according to the AAA gas prices website. Yesterday’s average was $4.678 per gallon, the week ago average was $4.800 per gallon, the month ago average was $5.010 per gallon and the year ago average was $3.147 per gallon, the AAA site showed. The highest recorded average price for regular gasoline was seen on June 14 at $5.016 per gallon, according to the site.


Average diesel prices in the U.S., as of July 12, came in at $5.625 per gallon, the AAA site showed. Yesterday’s average was $5.642 per gallon, the week ago average was $5.726 per gallon, the month ago average was $5.771 per gallon and the year ago average was $3.265 per gallon, according to the AAA site, which outlined that the highest recorded average price of diesel was seen on June 19 at $5.816 per gallon.


View on the Rigzone website

Oil eases on higher US crude output, hopes of Israel-Hamas ceasefire

By Emalee Springfield • 02 May, 2024
HOUSTON, April 30 (Reuters) - Oil prices fell 1% on Tuesday, extending losses from Monday, on the back of rising U.S. crude production, as well as hopes of an Israel-Hamas ceasefire. Brent crude futures for June, which expired on Tuesday, settled down 54 cents, or 0.6%, at $87.86 a barrel. The more active July contract fell 87 cents to $86.33. U.S. West Texas Intermediate crude futures were down 70 cents, or 0.9%, at $81.93. The front-month contract for both benchmarks lost more than 1% on Monday. U.S. crude production rose to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January in its biggest monthly increase since October 2021, the Energy Information Administration said. Meanwhile, exports climbed to 4.66 million bpd from 4.05 million bpd in the same period. U.S. crude oil inventories rose by 4.91 million barrels in the week ended April 26, according to market sources citing American Petroleum Institute figures on Tuesday. Stocks were expected to have fallen by about 1.1 million barrels last week, an extended Reuters poll showed on Tuesday. Official data from the EIA is due on Wednesday morning. Gasoline inventories fell by 1.483 million barrels, and distillates fell by 2.187 million barrels. Expectations that a ceasefire agreement between Israel and Hamas could be in sight have grown in recent days following a renewed push led by Egypt to revive stalled negotiations between the two. However, Israeli Prime Minister Benjamin Netanyahu vowed on Tuesday to go ahead with a long-promised assault on the southern Gaza city of Rafah. "Traders believe some of the geopolitical risk is being taken out of the market," said Dennis Kissler, senior vice president of trading at BOK Financial. "We're not seeing any global supply being taken off the market." Continued attacks by Yemen's Houthis on maritime traffic south of the Suez Canal - an important trading route - have provided a floor for oil prices and could prompt higher risk premiums if the market expects crude supply disruptions. Investors also eyed a two-day monetary policy meeting by the Federal Reserve Open Market Committee (FOMC), which gathers on Tuesday. According to the CME's FedWatch Tool, it is a virtual certainty that the FOMC will leave rates unchanged at the conclusion of the meeting on Wednesday. "The upcoming Fed meeting also drives some near-term reservations," said Yeap Jun Rong, market strategist at IG, adding that a longer period of elevated interest rates could trigger a further rise in the dollar while also threatening the oil demand outlook. Some investors are cautiously pricing in a higher probability that the Fed could raise interest rates by a quarter of a percentage point this year and next as inflation and the labor market remain resilient. U.S. product supplies of crude oil and petroleum products, EIA's measure of consumption, rose 1.9% to 19.95 million bpd in Feb. However, concerns over demand have crept up as diesel prices weakened . Balancing the market, output from the Organization of the Petroleum Exporting Countries has fallen in April, a Reuters survey found, reflecting lower exports from Iran, Iraq, and Nigeria against a backdrop of ongoing voluntary supply cuts by some members agreed with the wider OPEC+ alliance. A Reuters poll found that oil prices could hold above $80 a barrel this year, with analysts revising forecasts higher on expectations that supply will lag demand in the face of Middle East conflict and output cuts by the OPEC+ producer group. View on the Reuters Website

Oil and gas industry’s “strong” free cash flow to support increasing production targets

By Emalee Springfield • 01 May, 2024
Last year, the demand for loans from oil and gas companies fell 6% year-on-year, and that followed a decline of 1% in 2022. Oil and gas companies don’t need a lot of loans because they’re generating so much money these days from their underlying businesses, said Andrew John Stevenson, senior analyst at Bloomberg Intelligence. And that trend is likely to continue through the end of the decade, he said. “The oil and gas industry has experienced a number of booms and busts over the past few decades, but for now, it appears to be flush with cash,” he said. The healthy balance sheets reflect the boost that companies have received from rising oil prices, buoyed by robust demand and OPEC+ production cuts. The sector’s free cash flow is so strong that the group’s leverage ratio, which measures a company’s net debt relative to earnings before interest, taxes, depreciation and amortization, fell to 0.8 in 2023 from 2.4 in 2020, Stevenson said. The ratio will likely slide below zero by the end of the decade, he said.
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