US gasoline demand to rise due to Thanksgiving, remain below 2019 levels
Alex Snodgrass
23-Nov-2020
HOUSTON (ICIS)– The US gasoline market is expected to see a slight boost in demand due to the Thanksgiving holiday, but the rise will be lower than previous years.
Although gasoline inventories have recently returned to normal levels, oversupply is expected to persist on changing consumer habits.
Through 2020, the gasoline market was so oversupplied that utilisation rates often did not have much further to fall when the refineries were idled during the hurricanes in the US Gulf. The need to reduce rates or shut refineries happened so frequently that it allowed for a significant draw in gasoline inventories despite the record-low demand. Inventories are now considered to be at fairly normal levels for this time of year.
As more companies opt for permanent working from home and consumers shift their daily lives, typical consumption rates will be shifting.
US refinery utilisation remains well below historical averages amid lacklustre demand for gasoline and other refined products.
Increased restrictions across many regions of the US are dampening fuel demand. Some holiday increase is expected during Thanksgiving, but the seasonal demand boost will be significantly lower than previous years due to record coronavirus infections.
Although more people are expected to drive rather than fly for holidays in the rest of 2020, the CDC is telling Americans to remain at home and not visit family, dampening gasoline demand.
Sources say the world has never experienced a demand profile such as in 2020, although the market is flashing caution signs now with increasing production from around the world.
Refiners are likely to keep operating at very low levels, selling when they can out of inventory.
Low refinery utilisation also has ramifications for the petrochemicals industry, because important feedstocks like propane, butane, refinery-grade propylene (RGP) and aromatics are produced in refineries.
US refinery rates increased by 2.9 percentage points in the week ended 13 November, according to the US Energy Information Administration (EIA) on Wednesday.
Focus article by Alex Snodgrass
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