U.S. gasoline demand is weakening, prompting refineries to additionally cut capacity utilization and crude processing in a sign that resurging coronavirus cases are derailing fuel demand recovery.

According to this week’s petroleum inventory report from the EIA, gasoline stocks in the United States increased by 1.9 million barrels for the week to October 16. Gasoline production last week averaged 8.9 million bpd, compared with 9.2 million bpd a week earlier.

U.S. refinery runs averaged 13 million barrels daily, compared with 13.6 million bpd a week earlier, operating at 72.9 percent of capacity, versus 75.1 percent of capacity during the previous week.

The level of gasoline supplied in the U.S. has now declined to 9 percent below the previous five-year average, compared to 4 percent below the five-year average at the beginning of October, according to estimates from Reuters columnist John Kemp.

The lower gasoline production and the jump in U.S. gasoline inventories point to falling gasoline demand in the country this month.

The jump in gasoline inventories and the renewed concern that U.S. demand is now falling sent oil prices down by 4 percent on Wednesday, with WTI Crude breaking below the $40 a barrel mark.

Some of the rise in gasoline inventories could be attributed to Hurricane Delta, but “the market overall remains troubled by a resurgent coronavirus raising concerns about demand, as mobility is being restricted, at a time of rising supply from Libya and a potential but now doubtful increase from OPEC+ from January,” John Hardy, Head of FX Strategy at Saxo Bank, said on Thursday.

READ ALSO  Consumers Will Pay For Carbon Pricing Costs

“It was the gasoline build which proved not great for sentiment, with the EIA reporting that US gasoline inventories increased by almost 1.9MMbbls over the week, compared to expectations of a draw. It was also the largest gasoline build since June, and comes despite the fall in refinery utilisation over the week,” ING strategists Warren Patterson and Wenyu Yao said.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:


Via Oilprice.com