US gasoline demand
The EIA (U.S. Energy Information Administration) reported that the four-week average US gasoline demand was almost flat at 9,751,000 bpd (barrels per day) for the week ending July 29, 2016, compared to the previous week. The gasoline demand is up by 2.2% YoY (year-over-year).
Gasoline prices hit a low of $1.14 per gallon on February 8, 2016, the lowest in 12 years. Gasoline prices are up by 18.4% from the lows in February 2016 due to the increase in gasoline demand. Partially as a result of this, crude oil prices are up more than 60% for the same period.
US gasoline demand estimates for 2016 and 2017
The EIA (U.S. Energy Information Administration) released its monthly Short-Term Energy Outlook report on August 9, 2016. It reported that US gasoline demand is expected to increase by 150,000 bpd to record levels of ~9.3 MMbpd in 2016 and 2017. This would be the highest annual average gasoline consumption on record. It would break the previous record set in 2007. Gasoline demand rose 2.7% in 2015 to an average of 9.2 MMbpd.
The EIA estimates that US highway travel is expected to rise by 2.3% in 2016 compared to 2015 due to lower retail gasoline prices and the strong labor market in 2016. This will lead to a rise in gasoline consumption in 2016. Expectations of a rise in gasoline demand should support gasoline and crude oil prices in 2016.
In the next part of this series, we’ll look at an important driver for crude oil in 2016: crude oil production.