Tom Kloza, global head of energy analysis for Opis, says this Fourth of July weekend could see some of the highest demand for gasoline ever. For the holiday period, gas demand per day could top 10 million barrels. The highest weekly average for gasoline demand was two weeks ago when it hit 9.815 million barrels a day, he said.
At the same time, gasoline prices averaged $2.04 per gallon nationally for unleaded in the first half of the year — the cheapest first-half fuel cost for drivers since 2004.
Gasoline prices, currently averaging $2.28, hit a high of about $2.38 around Memorial Day and prices could edge back toward that level. But Kloza said that may be the high mark for the summer, unless there is a hurricane that forces refinery closings in the Gulf or East Coast.
"We're going to have 10-million-barrel-a-day days, maybe this Friday or Monday and maybe both days in between. That should represent the peak in demand," for this year, he said. He said the weekly average could reach 10 million this week or next. "There's never been a number like that recorded ever for any week recorded by the Energy Information Administration."
U.S. gasoline demand was 9.7 million barrels a day, down from the record level the week earlier, according to EIA weekly data.
"Without a hurricane, it's a $2.25 to 2.40 driving season," he said.
"It's been a cheap year for fuel costs, and particularly for jet fuel, but also gasoline and diesel," he said, adding there has been very high demand. "All signs point to motorists breaking the all-time consumption mark, which was 2007," he said.
Kloza expects oil prices to hover around $50 per barrel until next year. Currently, the world is using 350,000 barrels a day more than it is producing, but that balance could swing quickly if Nigeria brings more crude online and when refineries cut back summer gasoline production, he said.
U.S. oil production was 8.6 million barrels a day last week — a million barrels a day below year-ago levels, according to the EIA.
"I do think [gasoline prices are] going to come down when kids are going back to school," he said. "Everything about July looks like it's going to line up to have the highest demand period yet." Without a storm, he said, prices look like they could have bottomed.
"Everyone with the $1.99 signs should have them ready for October or November," he said.
"Demand is going to be just terrific, but demand in September, October and November will drop."