EIA’s US gasoline demand
The EIA estimates that the four-week average US gasoline demand decreased by 31,000 bpd (barrels per day) to 9,354,000 bpd on April 13–20. However, demand increased by 117,000 bpd or 1.3% from a year ago.
The year-over-year increase in gasoline demand has a positive impact on gasoline and oil prices. US gasoline and crude oil prices have increased ~51% and ~60%, respectively, since June 21, 2017. The United States Gasoline ETF (UGA) seeks to track the performance of gasoline futures. UGA has gained ~51% since June 21, 2017. The United States Oil ETF (USO) aims to follow the performance of WTI oil futures. USO has gained ~57.6% since June 21, 2017.
US gasoline consumption estimates
US gasoline consumption averaged 9.32 MMbpd (million barrels per day) in 2017. According to the EIA, US gasoline consumption could average 9.35 MMbpd in 2018 and 9.40 MMbpd in 2019, respectively. Consumption might reach the highest annual average in 2018 and 2019, respectively.
A rise in gasoline demand benefits gasoline prices. Higher gasoline prices relative to crude oil prices usually benefit refining companies. The VanEck Vectors Oil Refiners ETF (CRAK) aims to track the performance of the MVIS Global Oil Refiners Index. CRAK fell 0.3% to $32.24 on April 27, while gasoline prices rose 0.7% on the same day. US refining companies, Phillips 66 (PSX) and Valero (VLO) account for ~15% of CRAK’s holdings. These stocks fell ~1% and 1.5%, respectively, on April 27.
US gasoline demand was ~4.2% above its five-year average, which is bullish for gasoline and WTI oil prices. Record gasoline demand in 2018 and 2019 could also benefit gasoline and oil prices.
Next, we’ll discuss US and Cushing inventories.