Genscape: Thanksgiving Holiday Gasoline Demand Falls Short of Expectations
U.S. gasoline demand over the Thanksgiving holiday weekend only showed modest gains relative to the previous week and 2016 levels, despite expectations of increased holiday travel. Sizable growth in PADD 1 and PADD 2 consumer demand was mostly offset by year-on-year declines in the rest of the U.S, according to Genscape’s Supply Side data.
Earlier in November, AAA projected that 50.9 million American consumers would travel 50 miles or more away from home over the Thanksgiving holiday, a 3.3 percent increase from the previous year. This projection did not completely carry over to U.S. gasoline demand during the Thanksgiving holiday, however, as weaker year-on-year demand in the Gulf Coast, Rockies, and West Coast negated demand gains in the East Coast and Midwest.
Total weekly U.S. gasoline demand for the week ending November 24 was 9.508mn bpd, a 1.24 percent increase from the previous week and the highest estimated level seen since early October, according to Genscape’s Weekly Gasoline Demand Report. Genscape’s demand estimates are based on its Supply Side rack activity data.
For the week ending November 17, weekly Energy Information Administration (EIA) gasoline products supplied jumped to 9.595mn bpd, a 4.61 percent increase and 2.16 percent above Genscape’s estimate of 9.392mn bpd. The sharp increase in the EIA product supplied number the week before Thanksgiving is likely due to the depletion of primary stocks in anticipation of holiday downstream demand, since the EIA products supplied number is based on primary storage changes rather than downstream activity.
Gasoline rack activity increases from the previous week, but gains modestly compared to 2016
Looking at individual days during the week preceding the Thanksgiving holiday, gasoline rack activity in all U.S. regions increased. The height of November activity was seen on Tuesday, November 21 and Wednesday, November 22. Comparatively, total U.S. gasoline rack activity increased 12 percent compared to the previous Tuesday, and 17 percent week-on-week compared to the previous Wednesday. The largest weekly gains were seen in PADD 2, when gasoline rack activity on November 22 was 25 percent above the previous week’s. However, gasoline rack activity contracted sharply on the Thanksgiving holiday on November 23, and remained relatively weak through the remainder of the holiday weekend.
An analysis of Genscape’s Supply Side Time Normalized data showed a slight increase in total U.S. gasoline demand as measured by rack activity, when compared to 2016. This was buoyed by significant gains in PADDs 1 and 2. From November 17-26, total U.S. gasoline rack activity grew only 0.4 percent relative to 2016, due to weaker-than-expected demand for several U.S. regions.
Gasoline rack activity posted strong year-on-year growth on Friday, November 17, with the exceptions of PADDs 4 and 5. Total U.S. gasoline rack movements that day were up 9.5 percent from the previous year. PADD 1 gasoline rack activity increased 9.9 percent from 2016, with especially strong growth in PADD 1B. PADD 2 also grew considerably on November 17 compared to the previous year, up 11.5 percent.
But as the holiday week continued, that year-on-year growth in U.S. gasoline rack activity began to erode, driven by overall weaker demand in PADDs 3, 4, and 5. Additionally, PADD 2 gasoline demand activity fell relative to 2016 demand on Monday, November 20 due to flooding in Illinois, Indiana, and Ohio, down 11.3 percent year-over-year.
Black Friday, the largest day in U.S. retail sales, showed only modest gasoline demand growth relative to 2016, with total U.S. gasoline rack activity up only 1.3 percent. Again, rack activity increased sizably in PADDs 1 and 2, but fell year-on-year in the rest of the country. Weekend gasoline demand on November 25-26, when travelers typically begin to return home, only grew 0.2 percent and 0.7 percent from 2016 levels, respectively.
Gasoline pricesebb from November highs, but remain above 2016 levels
Higher gasoline prices, supported by the recent recovery in crude oil prices, might have also contributed to weaker-than-expected holiday demand. Gasoline prices have generally declined since early November, but have not declined seasonally, and have remained higher than 2016 prices in late November (generally, retail gasoline price declines tend to lag rack prices).
Average U.S. gasoline rack prices for regular gasoline were $1.76-$1.78/gal over the Thanksgiving travel period, down as much as $0.15/gal from the $1.91 average levels seen in early November. Genscape data showed that average Prices in PADD 4, however, only declined $0.04/gal from November 7, ranging between $1.86-$1.87/gal.