Gasoline Demand Hits 26.8M Barrels in Aug, Surpassing 2019

Global gasoline demand set to exceed 2019 levels at 26.8 million barrels a day in August, with Memorial Day travel hitting record highs.

By Athena Xu

5/15, 04:29 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF

Key Takeaway

  • Global gasoline demand is forecasted to exceed pre-pandemic 2019 levels this summer, reaching 26.8 million barrels a day in August.
  • Recent declines in US mobility and hedge fund bets against gasoline are seen as temporary, with strong recovery expected.
  • US Memorial Day weekend travel projected to hit a two-decade high, indicating robust road travel demand amidst refinery closures.

Gasoline Demand Surges

Despite recent signs of softness, global gasoline demand is expected to remain robust through the summer, with consumption projected to exceed pre-pandemic levels seen in 2019. Rystad Energy A/S forecasts global demand to reach 26.8 million barrels a day in August, surpassing seasonal levels of the past two years and 2019. This optimistic outlook is supported by Mukesh Sahdev, head of Rystad’s oil trading solution team, who believes the recent decline in US mobility is a temporary setback. Furthermore, despite a four-week gauge of US consumption hitting a 10-year seasonal low (excluding 2020) and refinery profits from gasoline slumping in Asia, the overall sentiment remains positive.

Memorial Day Travel Boom

The American Automobile Association (AAA) anticipates a record-breaking travel surge over the Memorial Day weekend in 2024, with an estimated 43.8 million Americans traveling, marking a 4% increase from the previous year. This surge includes a significant uptick in road trips, expected to reach an all-time high of 38.4 million travelers, and air travel, which is set to be the busiest since 2005. Popular destinations range from domestic locales like Orlando and New York to international hotspots such as Rome and Paris. This travel boom underscores a robust recovery of the travel industry from the pandemic's impacts and reflects a growing preference for experiences over material possessions.

Traffic and Fuel Price Implications

With the anticipated increase in travel, traffic congestion in major metropolitan areas is expected to peak, particularly on the afternoons of Thursday and Friday before the holiday and on Saturday and Sunday afternoons. Memorial Day itself is likely to see peak traffic from 3 p.m. to 7 p.m. Despite these challenges, retail gasoline prices are projected to remain similar to the previous year, with potential increases as the summer driving season progresses. This scenario suggests that while travelers may face higher fuel costs and traffic delays, the desire for travel and experiences continues to drive demand.

Street Views

  • Mukesh Sahdev, Rystad Energy A/S (Bullish on global gasoline demand):

    "I see gasoline markets being balanced-to-strong for the summer... It’s likely the recent decline in US mobility is a temporary blip."

  • Standard Chartered Plc (Bullish on US gasoline demand):

    "The pessimism over US gasoline demand was 'unwarranted,' citing the trend for initial weak estimates of US consumption to be revised upward."

  • Eugene Lindell, FGE (Cautiously Optimistic on refinery margins and summer demand):

    "While refinery margins had slumped, weakness was likely to be transitory given strong summer demand was set to boost prices."

  • Jeff Currie, Carlyle Group Inc. (Bullish on this year's US summer driving season):

    No direct quote provided but mentioned as having a positive outlook.