USA Driving Season Labeled Major Disappointment
The U.S. driving season has proved a major disappointment for the oil market.
That’s according to a new report from Standard Chartered, which highlighted that the period is the usual peak period for gasoline demand.
“The driving season, which most assume starts in late May, has not provided the usual boost to demand this year,” analysts stated in the report, which was sent to Rigzone late last week.
“Gasoline demand for July stands at 8.592 mb/d, slightly above the lockdown-affected July 2020 8.46 mb/d, but lower than every other July since 1997,” the analysts added in the report.
“The year on year decline in demand accelerated to 7.6 percent in July from 3.9 percent in June. This weakness has damaged market sentiment, as many analysts had propounded the theories that 1/ - demand would be unaffected by high prices and 2/ - the market would tighten due to high gasoline demand as Americans took extra holidays,” the analysts continued.
In the report, the analysts noted that the average U.S. price of retail gasoline has fallen by more than $80 cents per gallon, or 16 percent, since the mid-June peak, which they said should support demand in August.
“However, we think the theory that the U.S. market will bear gasoline prices of $5 per gallon for an extended period has now been tested to its destruction,” the analysts stated in the report.
Standard Chartered analysts also outlined in the report that their U.S. oil data bull-bear index fell 14.2 week on week to a “highly bearish” -54.4.
“This is the seventh bearish reading in eight weeks, including three highly bearish and two ultra-bearish readings. The index was pulled down by weak gasoline demand and by a 6.46 million barrel increase in crude oil inventories relative to the five-year average,” the analysts stated in the report.
The average regular gasoline price in the U.S. stands at $4.033 per gallon as of August 9, according to the AAA gas prices website. This average stood at $4.059 per gallon yesterday, $4.189 per gallon a week ago, $4.696 per gallon a month ago, and $3.190 per gallon a year ago, the AAA site highlighted. The highest recorded average price of regular gasoline was seen on June 14 at $5.016 per gallon, the AAA site shows.
Several states – including Texas, Oklahoma and Kansas – now have average regular gasoline prices under $4 per gallon, according to the AAA gas prices site. Some states however - such as California and Hawaii - still have regular gasoline prices of more than $5 per gallon, the AAA site highlights.
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