Weekly data on gasoline demand is indicative of recovery, but hardly definitive or precise.
Holy spreadsheets, Batman! You mean all those numbers I entered into the computer were not facts, just numbers! That was a shock to me, but also a valuable lesson, which is to understand what the numbers you have represent, instead of just reading a column heading.
Oil traders are like the drunk looking for his keys under a streetlight because ‘the light is better there’. You don’t have data on oil consumption, so you have to look at the EIA’s weekly petroleum statistics report, which is very detailed but not without holes, especially exports, which are estimated not actual reported data, and thus often revised later. Data on consumption is not available, so the product supplied data is relied upon as a reasonably good analogue—at least in normal times.
While it is possible, even likely, that gasoline consumption is reviving the rate remains very uncertain. In all likelihood, the initial drop of 5 mb/d was exaggerated by wholesalers and retailers who knew that sales would be dropping off and didn’t restock, that is, let their inventories draw down some. And the recent rebound almost certainly includes some restocking, not actual consumption.
More worrisome is the probable hit to the summer driving season, which usually provides refiners with a significant portion of their profits. As the figure below shows, summer gasoline demand is normally about 500 tb/d above the annual average and about 1 mb/d higher than the year’s lowest point. In the great recession of 2008/9, many practiced ‘staycations,’ that is, not traveling great distances but enjoying local attractions and backyard barbeques.
And thought the next few weeks’ data on petroleum product supplied will increase the confidence about recovering demand , they will not inform us as to whether or not there will be a second wave of infections from the loosening of restrictions in many states around the country. That is an entirely different dataset and a worrisome possibility.
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