Low gas demand keeps price down
U.S. demand for gasoline and diesel, crushed by the coronavirus pandemic, is expected to plunge by 10.5 percent in 2020, a new report says, putting pressure on fuel prices at the pump that had rebounded quickly recently.
Demand for vehicle fuel is forecast to decrease to 10.1 million barrels per day, down from 11.2 million barrels a day last year, before rising next year to 10.6 million barrels a day, according to Rystad Energy, a Norwegian research firm.
As the pandemic kept people at home, gasoline and diesel fuel demand bottomed out in April, falling to 6.9 million barrels per day, 39 percent less than a year earlier. The decline was less severe in May, falling by 20.5 percent to 9 million barrels per day, and will continue to improve in June, dropping 15.1 percent to 9.9 million barrels per day, according to Rystad.
The slow recovery is putting a damper on the
increase in the average price of gasoline, which rose quickly as economies have opened after months of being shut down by the pandemic. But those increases stalled in recent weeks, according to price tracking website GasBuddy.
“Gasoline demand’s recovery has slowed, keeping prices from matching their rapid pace from just a couple weeks ago,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “Prices will continue to move in lock-step with the coronavirus situation, so it remains challenging to know where prices will go in the weeks ahead.”
Gasoline prices in Houston and across the nation rose by a penny over the past week. In Houston, gasoline averaged $1.60 a gallon, up 7 cents from a month ago but 88 cents lower than a year ago. Nationally, the price averaged $1.97 a gallon, up 20 cents from a month ago, but still down 85 cents from a year ago.
Crude oil prices have recovered substantially from their dive into negative territory in late April, but they remain week, settling Monday at about $35 a barrel in
New York.
Demand for crude in the U.S., according to Rystad, is forecast to fall by 2.4 million barrels a day to 18.1 million barrels per day, down 11.8 percent from 20.5 million barrels a day last year.
Globally, Rystad predicts that oil demand will decline by 11.4 million barrels a day to 88.1 million barrels per day in 2020, an 11.5 percent decline, before rebounding in 2021 to 96.3 million barrels per day.