Gasoline at the pump was about 50 cents a gallon (-16%) cheaper this year compared to last, yet gasoline demand over the last four weeks is on par to a year ago (9.03 MMbbl/d), i.e. when the global economy was staring into the abyss.
U.S. suppliers of crude oil have apparently lost our address. Over the last four weeks imports averaged only 8.6 MMbbl/d. That is 1.6 MMbbls (-15.7%) below a year ago and 1.4 MMbbl/d (-13.7%) below the 2003-2007 timestep. That is low even by turnaround season standards.
As such, we have little doubt that the trifecta of weak demand – as evidenced by poor refinery economics in the last half of September, first half of October – as well as the flattening in the forward curve and strong domestic production reduced demand for foreign oil.
Refinery activity continues to lag and gasoline production ramped up for a second straight DOE report. Thus, despite being in the midst of turnarounds, supplies of products, both gasoline and distillate fuels, are holding steady.
Furthermore, a rebound in margins in the latter half of October, along with the lack of carry in the NYMEX WTI term structure, will incentivize refiners to build products, post turnaround season, i.e. minimize crude oil stocks and maximize product stocks into the NYMEX RBOB and heating oil curves.