ALEXANDRIA, Va.—Gasoline demand is down for the second week in a row, falling to the lowest level since mid-June, according to AAA. Meanwhile, the Organization of the Petroleum Exporting Countries now says the coronavirus pandemic will hurt the global energy market more severely than originally feared, according to the Wall Street Journal.
The latest U.S. Energy Information Administration (EIA) report measures gasoline demand at 8.3 million barrels per day, with gasoline supply levels down nearly three million barrels of oil (Bbl) to 231 million bbl. Supplies have consistently declined week-over-week and are at a three million Bbl year-over-year surplus, AAA said.
“Usually, lower supplies of gasoline translate into higher pump prices,” said Marie Dodds, public affairs director for AAA Oregon/Idaho. “But with the drop in demand, that’s not the case now. Demand is down for a number of reasons. The wildfires torching millions of acres in Oregon and other western states are putting a dent in demand. Tragically, with lives being lost, homes burning, and thousands evacuated, plus the hazardous air quality, people are suffering devastating losses, with lives and daily routines totally disrupted,” Dodds said.
“Other factors limiting gasoline demand are schools have opened with virtual learning due to COVID-19, many businesses continue to allow employees to work from home, and the abridged summer travel season has wrapped up.”
In its monthly report, OPEC predicted that the pandemic will reduce the demand for oil by 9.5 million barrels a day, a decline of 9.5% from last year. The cartel softened the amount by which it expects non-OPEC oil supply to fall this year—in part because of a recovery in U.S. output—and blunted its demand recovery forecast for next year. OPEC now expects a 4.1% contraction in activity.
As NACS Daily has reported, oil prices had been rebounding since April, when crude prices fell into the negative. In July, some analysts predicted prices would soar to $150 a barrel by 2025. Last month, Bank of America predicted oil prices would recover to $60 a barrel by early 2021.
Oil prices rallied yesterday, with Texas Intermediate futures, the U.S. benchmark, ending above $40 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, added $1.69, or 4.2%, to $42.22 a barrel on ICE Futures Europe.
In the spring, OPEC repeatedly slashed its oil demand forecast as the coronavirus hammered the global economy but then muted its most serious estimates during the summer. Monday’s cut marked the second straight month in which the cartel reduced its demand forecast.
The organization’s report was impacted by slowing economic activity, a slower-than-anticipated recovery in transportation fuel demand and rising coronavirus cases in India, Indonesia, Thailand and the Philippines.