Just before the July 4 holiday, oil expert Tom Kloza writes June 26 about the latest EIA estimate: Poor start to summer for gas demand (8.97m/day) and distillate (3.536m/day). Combined offtake down 858,000 b/d from last year. Brisk distillate exports but Northeastern stocks grew by 1.8-mil bbl. This is NOT the report that refiners were looking for, suggestive of torpor.
They were clearly hoping for a way to raise prices at the pump.
Several supply and demand factors are in play here. First, we are producing more oil and gas in the US than ever. Here is the chart from the EIA showing the ram up in oil production. Meanwhile, per-capita gasoline consumption makes the scenario even clearer. As the population has grown over the last two decades, while gasoline consumption has gone nowhere, per-capita gasoline consumption has plunged by 15% from 2003 and by 21% from 1978:
Trading Economics reports today:
WTI crude futures erased gains to trade below $81 per barrel on Wednesday after EIA data showed a surprise increase in US crude stockpiles, raising concerns about weakening demand in the world’s top oil consumer. US crude oil stocks rose by 3.591 million barrels last week, contrary to market expectations of a 3 million barrel decline, as per EIA. Also, crude stocks at the Cushing, Oklahoma, delivery hub decreased by 0.226 million barrels, following a 0.307 million build the previous week.
Gasoline stocks increased by 2.654 million barrels, against expectations of a 1.10 million barrel decline.
Moreover, investors remained cautious ahead of US PCE inflation data this week, which could influence the Federal Reserve’s interest rate decisions. Oil prices have been near two-month highs amid heightened geopolitical risks from Ukrainian drone attacks on Russian oil infrastructure and the failure to secure a peace deal between Israel and Hamas.
The number of miles driven by highway-legal vehicles of all types – cars and light trucks, buses, motorcycles, delivery vans, medium-duty and heavy trucks – rose to 3,264 billion miles in 2023, squeaking past the prior record of 2019, according to estimates by the Department of Transportation. There are a lot more people, but they’re on average driving less.
Meanwhile the fleet of cars sold the US and in California for example, are using less gas per gallon or no gas. In the Golden State a growing number of sales are either hybrid or zero emission vehicles.23.9% of all new cars sold in California last quarter were ZEVs, according to the California Energy Commission.
Combined share for BEVs, PHEVs, hybrids,
and fuel cell vehicles in California was 37.5 percent in
1Q ‘24, up from just 11.6 percent in 2018.