The U.S. summer driving season got off to a slow start during the week ending June 2, as U.S. Memorial Day holiday gasoline demand fell significantly relative to demand during the previous week and the same week last year, according to Genscape Supply Side data. The demand drop also led to a counter-seasonal build in total U.S. gasoline stocks. Higher-than-normal precipitation likely contributed to fewer cars hitting the road on the holiday and in the days following.
The Memorial Day holiday weekend is typically viewed as the official start to the summer driving season in the United States, when gasoline demand hits a seasonal peak. However, on June 5, Genscape estimated that total U.S. gasoline products supplied for Memorial Day week (the week ending June 2) was 9.375 million (mn) barrels per day (bpd), down 4.7 percent from the previous week, which was the highest week for gasoline demand since June 2016.
EIA data showed that, on June 7, a similar decline of 9.317mn bpd occurred for U.S. gasoline products supplied during the week ending June 2, and was down 5.14 percent from the previous week. This significant week-on-week decline in demand contributed to the sharp rise in total EIA U.S. gasoline inventories for the week ending June 2, up 0.7 percent or 3.3mn bbls to 240.3mn bbls from year-ago levels. By comparison, total U.S. gasoline products supplied was 9.568mn bpd for the week ending June 1, 2016, meaning that the 2017 demand for the same week was 2.6 percent below 2016.
Daily analysis using Genscape Supply Side gasoline rack data showed that most of the losses in demand came on the Memorial Day holiday and the days following (see graph above), with total U.S. rack activity falling to as low as 230mn gallons (gals) on Memorial Day, May 29. This was partially due to above-normal rainfall across parts of PADDs 1, 2 and 3 during that time period, as reported by precipitation data from forecasting firm Commodity Weather Group (see map below).
Year-on-year comparisons for the week including Memorial Day also showed a weakening trend for demand, especially in the weekdays following Memorial Day, according to Genscape Supply Side Time Normalized Data.
Total U.S. demand at the start the holiday weekend on May 26 was flat relative to a year ago, but on Saturday, May 27, it was 1.9 percent below the same Saturday a year ago. Monday, May 29, was also 0.8 percent below Memorial Day 2016, and by Wednesday, May 30, heavy midweek rains pushed current year demand 5.8 percent below the same Wednesday in 2016.
PADD 2 appeared to be the hardest hit by weak year-on-year demand, with current year demand falling 4.0 percent and 2.2 percent relative to 2016 for the Saturday and Sunday respectively. Wednesday, May 30, demand in PADD 2 fell 9.4 percent relative to the Wednesday after the holiday in 2016.
A comparison of week-on-week Genscape Supply Side gasoline data also illustrated the lower-than-normal Memorial Day weekend demand and the impact that heavy precipitation had on gasoline consumption in the days following the holiday. For Friday, May 26, total U.S. gasoline rack activity topped 332mn gals, 4.7 percent above the previous week. On a week-on-week basis, demand began to show a weakening trend on May 29, with total U.S. gasoline rack activity nearly 19 percent below the previous week. The trend continued for the rest of the week for total U.S. gasoline rack levels, as rack activity was 8.2 percent and 7 percent below the previous week for May 30 and 31, respectively.
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