Falling gasoline demand that spooked market sparks fury over US data

(Bloomberg) – The world’s most closely watched energy data by the US government is sparking an unusual amount of confusion and even skepticism in some corners.

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The Energy Information Administration reported that the four-week average of gasoline supplied, an indicator of demand, fell last week below the same period in 2020 when the country was in the throes of the Covid pandemic. -19. The report led New York gasoline futures to fall 25 cents per gallon in intraday trading. While the pressure of high prices has been very real for most American drivers and was expected to blunt consumption, the magnitude of the drop surprised many.

“This is the first time I’ve seen a weakening in demand for gasoline in the face of a strong labor market,” said John Kilduff, Founder and CEO of Again Capital. Strong employment and falling prices suggest the EIA’s demand data is anomalous, he said.

The United States is the only major oil consumer and producer that offers such detailed data on the state of its domestic oil supply and demand. The EIA releases weekly and monthly data, keeping track of national stock inflows and outflows and providing a measure of transparency to often opaque markets. Data often drives energy markets, so its accuracy and integrity are paramount.

To be sure, there are plenty of legitimate reasons for the fall in demand for gasoline: more people are working from home, historic inflation is cutting household budgets, cars are more fuel efficient, and prices at the pumps – well than steadily declining – are still almost 30% higher than a year ago, according to the AAA automobile club.

Yet the EIA data appears to be at odds with other demand measures that paint a rosier picture. The agency’s gasoline supply figure measures the amount of product that has left primary storage sites – for example, refineries and bulk terminals. It does not track the number of gallons purchased by drivers at gas stations. In the same week that the EIA said the amount of gasoline supplied had fallen below levels for that first Covid summer, another demand gauge showed it was rising. According to GasBuddy, which looks at trading volume at 150,000 stations, retail gasoline demand hit 9.542 million barrels a day in the week ended July 24, the highest so far this year.

“While gasoline demand has lagged our expectations as we head into summer, the week-long gasoline provided by the Department of Energy report can be very volatile from one week to week and does not necessarily reflect demand trends,” Matt Murphy said. , director of energy research at Tudor Picking Holt & Co.

Some are also baffled by the apparent divergence in demand for gasoline and ethanol, which is blended into the fuel. Most on-road gasoline is blended with 10% ethanol, but the blend remains well above 2020 levels, leaving questionable gasoline demand moving in another direction.

“We wouldn’t have an explanation at this point,” EIA spokesman Chris Higginbotham said when asked about the potential anomaly.

Monthly gasoline demand data from the EIA can diverge wildly from the weekly figure. The December monthly figure, released on the last day of February, was 777,000 barrels per day higher than the weekly figures suggested during this period, a difference of 9%. It would be well within the EIA’s typical margin of error if July’s monthly data released in late September showed increases of several hundred thousand barrels per day.

The weekly figures are generated from a sample survey of respondents, while the monthly figures come from a census of survey respondents, Higginbotham said.

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