Will US Gasoline Demand Help Oil Bulls or Bears?

US gasoline demand 

The EIA (U.S. Energy Information Administration) estimates that US gasoline demand rose by 35,000 bpd (barrels per day) or 0.4% to 9,496,000 bpd on October 27–November 3, 2017. US gasoline demand rose by 283,000 bpd or 3.1% from the same period in 2016.

High gasoline demand is bullish for gasoline (UGA) and oil (USL) (OIL) (UCO) prices. Moves in oil prices impact energy producers (XLE) (XOP) like Occidental Petroleum (OXY), PDC Energy (PDCE), Devon Energy (DVN), and Sanchez Energy (SN).

Will US Gasoline Demand Help Oil Bulls or Bears?

Peak and low  

US gasoline demand hit a record 9,800,000 bpd in July 2017. In contrast, gasoline demand hit 8,000,000 bpd in January 2017, which was the lowest level since February 2014. The demand has risen ~18.7% or by 1,496,000 bpd since the lows in January 2017.

EIA’s US gasoline consumption estimates 

The EIA estimates that US gasoline consumption would average 9.33 MMbpd (million barrels per day) in 2017. Gasoline consumption is expected to rise by 20,000 bpd or 0.2% to 9.35 MMbpd in 2018. High gasoline demand supports gasoline prices and US refiners (CRAK) like Valero (VLO), Holly Frontier (HFC), Tesoro (TSO), and PBF Energy (PBF). US gasoline consumption averaged an annual record of 9.32 MMbpd in 2016.

Impact 

US gasoline demand is expected hit an all-time high in 2018. Peak demand could support gasoline prices. Higher gasoline prices would drive oil (DBO) (DWT) (UWT) prices higher.

In the next part, we’ll discuss how Russian and US crude oil exports impact oil prices.