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US gasoline demand rises while commercial crude stocks spike: EIA

Highlights

Implied gasoline demand jumps 6.8% to 9.12 million b/d

Commercial crude stocks spike by 5.5 million barrels

Gasoline stocks plunge by 5 million barrels

US gasoline demand rose for the week ended Aug. 5 after previously showing counter-seasonal weakness, but commercial crude inventories surprisingly and bearishly spiked by much more than anticipated, according to weekly data released Aug. 10 by the US Energy Information Administration.

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The mixed-bag inventories report showed that fuel demand is still relatively strong, while the weekly data on commercial crude stocks was impacted in part by rising domestic oil production and temporarily weaker crude exports.

However, energy analysts were watching the implied gasoline demand more closely this week after weakness during recent weeks pointed to signs of demand destruction.

Implied gasoline demand rose to 9.12 million b/d, up from 8.54 million b/d the week prior, representing a 6.8% jump, the EIA said, showing that demand is still pretty strong as the busy summer driving season nears its conclusion.

And demand is particularly strong along the East Coast as PADD 1 refinery utilization hit a record high of 100.4% -- up from 98.2% the week prior. Patrick De Haan, head of petroleum analysis at GasBuddy, said the new weekly record is "signaling tremendous need for refined products in the region" where supplies are dwindling.

Likewise, PADD 3 utilization in the Gulf Coast jumped to 98%, up from 95.3%.

Total US refinery utilization was 94.3% for the week ended Aug. 5, up from a lower-than-anticipated 91% a week prior, the EIA said.

With inflation slowing and fuel prices falling, fuel demand could continue to fight back against demand destruction going forward.

De Haan noted that retail gasoline prices in the US have fallen for 56 straight days on average. The national average for unleaded regular gasoline is $3.975/gal, according to GasBuddy, as prices have fallen below the $4/gal threshold for the first time since March. The average for diesel fuel is $5.117/gal. De Haan said diesel should fall to $4.99/gal "in the next week or so," while gasoline should dip to $3.89/gal by early next week.

Inventory levels

US commercial crude stocks climbed by an unexpectedly high 5.5 million barrels in the week ended Aug. 5 to about 432 million barrels, according to the EIA. The build left stocks 5% below the five-year average, down from 6.7% the week prior.

The commercial crude buildup was focused on the USGC where stocks rose by 4.7 million barrels to 242.4 million barrels.

US crude production rose to a two-year high of 12.2 million b/d, the EIA said, while oil exports for the week fell to 2.1 million b/d, down from 3.5 million b/d the week prior, which contributed to the crude stocks build.

American Petroleum Institute data released late Aug. 9 showed a 2.16 million barrels build in US crude supply in the week ended Aug. 5, while analysts surveyed by S&P Global Commodity Insights on Aug. 8 had expected a much smaller 600,000-barrel jump over the period.

Notably, the EIA report showed a 5.3 million barrel draw from the US Strategic Petroleum Reserve, meaning total US crude inventories edged 200,000 barrels higher -- up from the week prior's 18-year low.

However, somewhat balancing the crude build, US gasoline stocks plunged by 5 million barrels. And implied gasoline demand rose to 9.12 million b/d, up from 8.54 million b/d the week prior, showing that demand is still pretty strong.

Gasoline supplies are about 6% below the five-year average for this time of year, the EIA said. The dip in gasoline stocks also was sharpest along the USGC where supplies fell by 2.3 million barrels for the week. But the 1 million barrel dip along the East Coast is potentially more headline-grabbing because of the preexisting sparsity of supplies.

The US also exported more gasoline for the week, up to 1.13 million b/d versus 840,000 b/d for the week prior, according to the EIA.

Nationwide distillate fuel oil inventories rose by 2.2 million barrels, and are still 24% below the five-year average, contributing to higher diesel and jet fuel prices that have spiked more than crude oil and gasoline costs this year.