Fuel consumption, measured by the amount of gasoline sent to the market, last week rose to the highest level since the end of July. The figures defy expectations that Covid-19 concerns would keep more Americans at home and drive down demand.
The consumption boost offers encouragement to an industry bedeviled by the volatile recovery from the pandemic. Delta’s spread has put thousands in intensive care, prompting worries that summer travel would fizzle out well before Labor Day, which is the traditional end of the season. Tracking those concerns, oil’s stellar year-to-date rally cooled in the first half of August.
“Still a lot of Americans are willing to get out and live their lives in the midst of Covid,” said Robert Yawger, director of the futures division at Mizuho Securities.
Americans’ penchant for hitting the road is also showing up in stockpiles. Gasoline supply in the region including New York last week dropped to its lowest in nearly four years. Cash-market prices in New York Harbor and Houston increased Wednesday in response, along with futures. The spread of gasoline over crude oil rose more than 12%.
Despite the uncertainty in the market, U.S. oil refiners have on the whole navigated the latest twists and turns with success, Yawger said.
“More often than not, they get that math wrong in a normal year,” he said.