By Brian L. Milne, Energy Editor, Schneider Electric
Snowstorms are again enveloping the heavy population centers of the Northeast and Mid-Atlantic, with the winter weather expected to limit driving, retarding demand for gasoline which fell to a one-year low during the week that the “polar vortex” descended upon a large swath of the United States.
Preliminary data from the Energy Information Administration (EIA) shows gasoline supplied to market averaged 8.021 million bpd during the week-ended Jan. 10, the most recent data available. The previous low was plumbed during the first week of 2013, with gasoline demand weakest in January and February.
The financial market reacted to the seasonal weakness in gasoline earlier in January, with the nearest delivered New York Mercantile Exchange Reformulated Blendstock for Oxygenate Blending futures contract sliding to a two-month low mid-January at $2.5882 gallon. In the physical market, supplier offers for gasoline were shallowly mixed on average at major metropolitan markets across the U.S. heading into this week, while EIA’s U.S. retail gasoline price average eased 0.5cts to a $3.327 gallon three-week low during the week-ended Jan. 13.
NYMEX RBOB futures are indexed against in the spot market.
Following Martin Luther King Jr. Day, NYMEX RBOB futures were rallying on bullish technical signals and upward revisions to global oil demand expectations amid growing sentiment the world economy would continue to expand in 2014 and on better-than-expected oil consumption data from late 2013.
“Unexpectedly strong deliveries in the U.S. lifted global oil demand for the final quarter of last year,” said the Paris-based International Energy Agency Jan. 21 in their latest Oil Market Report, which revised global oil demand up 135,000 bpd for 2013 and 100,000 barrels per day (bpd) for this year.
IEA had also revised higher their global oil demand estimates in their December OMR for 2013 by 130,000 bpd on stronger-than-expected consumption realized in the third quarter.
Global oil demand surprised to the upside late last year, especially in the U.S., with analysts linking the greater-than-expected growth to an expanding economy. That trend is seen continuing this year, with the IEA also revising higher expected crude demand for the current first quarter driven by “surging U.S. crude runs,” lifting its forecast for global refinery crude runs by 110,000 bpd from its December report to 76.8 million bpd.
Supply is also growing, and expected to expand at a greater rate than demand this year that is seen pressuring global crude prices. Still, the higher than projected readings on demand, especially in the U.S. could mitigate the expected decline in global oil prices this year if the current trend continues.
About the Author
Brian L. Milne is the Energy Editor for Schneider Electric—a global specialist in energy management. Milne has been focused on the energy industry for 18 years as an analyst, journalist and editor. He can be reached at [email protected]