Baseball fans are familiar with the term "June swoon." And U.S. refiners and fuel marketers are worried that description could apply to their businesses should gasoline demand remain weak.
Gasoline demand next month could remain well below that of June 2023, despite prices that are in most cases within 10 percentage points of what they fetched last year.
Only in Alaska is the average gasoline price more than 10% above the year-ago level and Arizona leads the average price down more that 15% from 2023.
One issue is that demand next month will be competing with inordinately high consumption in June 2023.
The Energy Information Administration last year reported gasoline demand last June exceeded 9.193 million b/d.
There were some clear signals and advance warning of those 2023 uptrends. EIA's weekly assessments that bracketed the U.S. Memorial Day holiday, for example, put domestic gasoline demand at 9.218 million b/d and 9.193 million b/d.
Demand in the following weeks of June were even higher, averaging 9.375 million b/d, 9.306 million b/d and 9.599 million b/d, according to EIA. When all the driving season figures were ultimately compiled later in the third quarter, only July, with average implied demand of 9.299 million b/d, topped the June number.
While EIA defines the U.S. "driving season" as running from April 1 through Sept. 30, most fuel analysts believe the actual season lasts only for June, July and August, which are the longest days of the year and the peak vacation period.
And if the first five months of any year set the stage for future performance, there are clear warning signs about demand in the three-month period this year.
It's true that more often than not last year, EIA's sometimes lackluster weekly demand numbers were modestly raised in the agency's monthly true-ups. Still, there is no denying that year-to-date data in 2024 suggests considerable year to year demand destruction due to drivers that appear to be sticking close to home.
In its Weekly Petroleum Status Report released on Wednesday, EIA estimated gasoline demand averaged 8.588 million b/d over the first 130 days of 2025, 1.5% below the same period of last year. And the deficit has widened in recent weeks.
If that 1.5% shortfall continues through June, demand next month could average just 9.14 million bbl compared to 9.279 million b/d in June 2023.
The number could be viewed by some in the market as underwhelming and lead to an early summer deterioration in gasoline cracks.
Most assessments of U.S. refining capability suggest that refiners, blenders and importers will push about 10-million b/d of motor fuel to market beginning in the next few weeks. That may not be an issue if exports continue to be robust, but typical driving season data on imports and exports speaks to the difficulty of increasing summer exports, particularly to markets in the Southern Hemisphere where shorter days and less tourism in Mexico and the Caribbean can often crimp motor fuel demand.
The U.S., for example, exported 777,000 b/d last June while importing 925,000 b/d, according to EIA data. Put another way, gasoline supply in June was up by 4.44 million barrels thanks to imports exceeding exports.
There are other data points to consider in looking at 21st century demand trends for gasoline.
They include:
-The average gasoline demand of 9.158 million b/d over the two weeks bracketing Memorial Day weekend was the highest number since 2019. Demand over the holiday weekend in 2021 and 2022 was particularly high and many analysts don't consider data from the pandemic year of 2020.
-From 2016 through 2019, June gasoline demand averaged 9.72 million b/d. Only August, with a four-year average level of 9.763-million b/d topped June.
-June can have a sloppy beginning and things can turn around. Demand in the first week of June 2021 was at just 8.48 million b/d, but the U.S. demand record of 10.043 million b/d came in the week that ended July 2.
-Consumption patterns have been altered dramatically since 2019. In that year, demand in all but nine weeks exceeded 9 million b/d and that year included straight weeks when demand was above that number. In 2023 in only 17 weeks did EIA estimate demand at more than 9 million b/d and the longest streak above that mark was seven weeks.
-So far this year there have been just three weeks in which demand has come in above 9 million b/d. In the same period last year, gasoline demand topped 9 million b/d in five weeks.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
-Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
05-15-24 1725ET
