U.S. motorists start returning to the road: Kemp

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LONDON — U.S. gasoline consumption has started to increase in a sign motorists are starting to use their cars more as the economic lockdown eases.

Fuel consumption data show an economy that had adjusted to an exceptional economic shock by the middle of April and demonstrated some signs of improving in the second half of the month.

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The volume of gasoline supplied to the domestic market rose to almost 6.7 million barrels per day (bpd) last week, according to estimates prepared by the U.S. Energy Information Administration.

Gasoline supplied has increased for four weeks running, a sign the coronavirus-driven lockdown on personal mobility is starting to ease (“Weekly petroleum status report”, EIA, May 6). Implied motor fuel consumption has gradually risen from a low of just 5.1 million bpd at the start of April, though it remains far below the 9.7 million bpd in the week ending March 13, when the national emergency was declared.

Strictly speaking, gasoline supplied measures the volume of fuel that “disappears” from the primary supply system (refineries, blenders, pipelines and bulk terminals) into secondary storage (small distributors and retailers) and tertiary storage (end users).

The EIA surveys only cover the primary petroleum system; the volume of fuel held downstream in secondary and tertiary storage is not observable, nor is actual fuel use.

The volume supplied each week can be distorted by timing differences in the reporting of production, imports and inventories, which is one reason the agency recommends tracking the four-week average.

Weekly volume supplied can also be affected if fuel is pulled forward along the supply chain towards customers, or backs up in the system, because of holidays, poor weather, and large-scale buying effects.

But each of the last four weeks has seen a progressively larger increment in gasoline consumption, which is consistent with an economy gradually exiting from extreme lockdown.

Implied gasoline consumption rose by 800,000 bpd last week, up from an increase of 550,000 bpd the week before and 230,000 bpd two weeks ago (https://tmsnrt.rs/2SI9x11).

Responding to the crisis, refiners have continued to limit gasoline production, which was running at just 6.7 million bpd last week, down from 9.8 million on the eve of the national emergency.

Refineries have produced an average of just 8.5 million bpd of gasoline since the start of the year compared with 9.9 million bpd by the same point in 2019.

As a result of refiner restraint, excess inventories of gasoline are slowly being digested, with stocks falling to 256 million barrels last week, down from a record 263 million barrels two weeks earlier.

Related columns:

– U.S. oil producers race to cut output as prices fall, storage fills (Reuters, April 30)

– U.S. oil consumption stabilizes but inventories continue to swell (Reuters, April 23)

– U.S. crude oil storage is filling rapidly (Reuters, April 17)

– Oil industry crisis starkly revealed in U.S. weekly data (Reuters, April 9) (Editing by Kirsten Donovan)