Gasoline demand is improving and is now about 30% below normal across the U.S., but as expected, it is much stronger in some states that have reopened, analysts said.
As demand improved, gasoline prices have now risen to $1.86 per gallon of unleaded, about 12 cents per gallon above their April low, according to AAA.
"Easter weekend was the bottom. That was about 47% demand destruction. Since that point and through May, we've been recovering about 1% of demand every day," said Tom Kloza, head of global energy analysis at Oil Price Information Services. "We are going to hit a wall on that. We think that right now demand destruction is about 30%."
Gasoline demand is usually about 9.5 million barrels a day at this time of year, and it is about 3 million below that.
Kloza said he does not expect gasoline prices to go much higher, but they could reach $2 as a national average, if demand continues to improve. He expects gas prices also have also hit their low of the year, unless there is another wave of outbreaks that forces more shutdowns.
According to GasBuddy, demand in Texas on average in the period May 5 through May 12 was only about 15% below its February average, improved from a decline of about 51% in early April. New York, which is mostly closed, continues to see soft demand, about 35% from normal but well below the decline of 65% in early April.
Georgia, which reopened almost two weeks ago, now sees gasoline demand just about 19% below normal over the past five days, compared to 57% on April 5, according to GasBuddy. California, first to close, sees gasoline demand down about 22% from normal but much better than the lowest demand day March 29, which was 49% below normal.
The gasoline market is closely watched since it is often seen as a reflection of the health of the U.S. consumer, but with consumers shut in their homes, demand has become a signal of how much economic activity could increase as consumers emerge. U.S. gasoline demand is also important to the world energy markets, since U.S. drivers normally use about 10% of daily oil supply in their cars.
"States that have reopened certainly show more growth in demand compared to their lows," said Patrick De Haan, head of energy analysis at GasBuddy.
Analysts do not expect demand to surpass 8.5 million if it even reaches that level this summer. The U.S. Energy Information Administration Wednesday released data showing about 7.5 million barrels a day of gasoline was used last month, but analysts note the data did not match what they have been seeing from industry sources and it may be revised lower once monthly data is available.
The U.S. government data shows gasoline demand was at its weakest when it fell to 5.1 million barrels a day in early April.