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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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U.S. Refiners Haven't Seen Fuel Demand Destruction

  • U.S. refiners: there's no indication of fuel demand destruction.
  • The latest reporting week in EIA data showed that gasoline demand increased from 8.52 million barrels per day (bpd) to 9.25 million bpd last week.
  • The weekly inventory reports from the EIA at the beginning of July pointed to faltering demand after nationwide gasoline prices hit an average of $5 a gallon in the middle of June.

U.S. refiners say there is no indication across their channels that America's fuel demand is weakening, contrary to recent data about gasoline consumption.

The weekly inventory reports from the EIA at the beginning of July pointed to faltering demand after nationwide gasoline prices hit an average of $5 a gallon in the middle of June. During earnings calls this week, however, some of the largest U.S. refiners said they hadn't seen any signs of demand destruction.   

"Through our wholesale channel, there's really no indication of any demand destruction. In June, we actually set sales records. We sold 911,000 barrels a day in the month of June, which surpassed our previous record in August of '18 where we did 904,000 barrels a day," Gary Simmons, Executive Vice President and Chief Commercial Officer at Valero Energy, said on the conference call on Thursday.

"We read a lot about demand destruction, mobility data showing in that range of 3% to 5% demand destruction. Again, we're not seeing it in our system. We did see a bit of a lull in the first couple of weeks of July, but our seven-day averages now are back to kind of that June level, with gasoline at pre-pandemic levels and diesel continuing to trend above pre-pandemic levels," Simmons added.

Tom Nimbley, chief executive at PBF Energy, said, "We're at basically the same levels we've been for the last 90 days," commenting on demand on the company's earnings call.

The latest reporting week in EIA data showed that gasoline demand increased from 8.52 million barrels per day (bpd) to 9.25 million bpd last week, AAA said on Thursday. While the national average gasoline price has dropped since Monday to $4.255 a gallon as of Friday, the rebounding demand and the latest decline in gasoline inventories "could pressure pump prices and slow price decreases if the trend holds," AAA noted.

According to data from fuel-savings app GasBuddy, Sunday-to-Wednesday U.S. gasoline demand was up 1.04% from last week, and was the highest of any Sunday-Wednesday period so far this year, exceeding the week ahead of July 4, Patrick De Haan, head of petroleum analysis for GasBuddy, said on Thursday.

By Tsvetana Paraskova for Oilprice.com

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  • Tim Browning on July 29 2022 said:
    YTD numbers from the EIA petroleum status report :

    Domestic oil production +7.9%
    US Oil deliveries +0%
    US Refinery Utilisation 92.2% (Pretty much a year low)

    I am not sure what number you are looking at, but these all look bad on a demand front!
  • independence01776 d on August 02 2022 said:
    Sounds like whistling thru the graveyard. Gas vehicle sales are down 40% from peaks in 2016/17. Two key reasons. 1) they are rapidly being replaced by EV's, whose sales during the past 5 years have increased from less than 1% of sales to nearly 20%. The only thing holding up even greater sales is the supply chain for batteries cannot keep pace with the growth. 2) The other key reason ICE sales are down, is folks are putting off buying another car, until one comes around they like. They are waiting for newer model EV's to enter the market, rather than buy an ICE car that loses 30% of its value the minute you drive it off the lot. This is known as the Osbourne Effect and takes place in any industry where new and better technology starts to replace existing old solutions that have seen their day pass.

    We are 3 years away from EV vehicles surpassing ICE sales. Less than 10 years away from gaining nearly 100% new vehicle market share. Like the horse, ICE vehicles will be around for some years, until they become a niche market for those interested in antiques.

    Since over 70% of oil is used for transportation, peak oil consumption is behind us, peaked in 2018/19. Today, production/consumption of oil is 10% less. Perhaps even greater with accounting for Russian production declines due to Europes boycott. However prices will remain elevated as additional politcal instability in the oil oligarchy of nations and suppliers gets worse with declining demand. Along with this, investors require higher returns for the risk they take on by investing in a declining industry. We have already seen this in the fossil fuel markets and it will only get worse. OPEC leaders have complained about it, so have US President and energy secretary. The fact is investors are walking away, even with prices near $100 a barrel. The result is less supply going forward.

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