Demand for gasoline at U.S. rack locations, the last stop in the supply chain before the pump, appeared to rise robustly at the end of last week, on some days challenging summer 2019 levels, according to a market participant. Demand consistently beating the market of two years ago would suggest completion of a major step in oil’s recovery from the slump, analysts said.
“There was a lot of concentrated driving through the holidays with the reopening of the economy and the vaccinations continuing to be rolled out,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “I think we saw the Fourth of July demand about where it was before the pandemic and once we get through the rest of the summer, we’ll see demand about 3 to 4 percentage points below where it was ahead of the pandemic.”
Gasoline consumption fell to as low 5.3 million barrels a day in April of last year, when pandemic shutdowns crimped travel.
The rise in demand, combined with the lack of any recent OPEC+ agreement on supply, has helped pushed up gasoline prices. Cash-market gasoline at Houston hit a four-month high Tuesday, and the national average retail price has risen more than 6 cents a gallon since June 19 to reach $3.13 a gallon, the highest since 2014.