Energy consulting firm Rystad Energy said that despite recent signs of market weakness, global demand for gasoline will remain strong this summer, and consumption is expected to reach the highest level before the pandemic.
The Zhitong Finance App learned that energy consulting firm Rystad Energy said that despite recent signs of market weakness, global gasoline demand will remain strong this summer, and consumption is expected to reach the highest level before the pandemic.
In recent weeks, the US gasoline consumption index has been at a seasonal low in 10 years (excluding 2020). In Asia, refiners' profits from gasoline production have declined sharply. Against this backdrop, hedge funds cut their net long positions on gasoline futures on the New York Mercantile Exchange.
However, Mukesh Sahdev, head of the oil trading solutions team at Rystad Energy, said: “I think the gasoline market will move from balance to strength this summer. The recent decline in gasoline consumption in the US is likely temporary.” Rystad Energy estimates that global gasoline demand is expected to reach 28 million b/d in August, higher than the seasonal level of the past two years and 2019.
Standard Chartered Bank said earlier this month that pessimism about US gasoline demand was “unfounded,” citing an upward revision trend in initial estimates of US gasoline consumption. Additionally, Eugene Lindell, head of the refined oil business at consulting firm FGE, said that despite a sharp decline in refining profit margins, this weakness may be temporary given that strong summer demand will drive up gasoline prices.
Jeff Currie, a commodity industry veteran and Carlyle Investments' Energy Path Chief Strategy Officer, expressed optimism about the outlook for the summer driving season in the US this year. According to the American Automobile Association, in the US, 38.4 million people are expected to hit the road this weekend of May 27, Memorial Day, the highest number in more than 20 years.
Rystad Energy's Mukesh Sahdev said that road trips will continue to recover from the pandemic, and the US election year will further boost travel. Furthermore, he said gasoline supply in the US and Europe will also be tightened due to the closure of refineries and related gasoline production units.