-- Robert Campbell is a Reuters market analyst. The views
expressed are his own. --
By Robert Campbell
NEW YORK Aug 25 The weakness of the gasoline
market in the United States has been hidden, at least in the
short term, by mounting exports, which have distorted weekly
Between January and May, the Energy Information
Administration's weekly "product supplied" figure -- a proxy
for wholesale demand -- has overstated U.S. gasoline
consumption by an average of 279,000 bpd when compared to the
more detailed monthly data that EIA produces.
As a result, the agency moved this month to adjust its
methodology for estimating exports in a bid to reduce the error
rate in its weekly consumption estimates. [ID:nN1E77N0NK]
But if the weekly data for recent months is off by an
amount similar to that seen in the first five months of the
year, U.S. gasoline consumption may be heading for its weakest
summer in a decade.
Demand will be below the 2010 level even with no downward
revisions for June, July and August, which must be the most
optimistic scenario. (Graphic: r.reuters.com/kyp43s )
In the past, exports have proved problematic for the EIA,
which does not collect its own data. But market watchers should
be used to the problem, which has been around for years.
This time around, weekly estimates have miscounted rising
gasoline exports to Mexico and elsewhere in Latin America as
EIA officials acknowledge the difficulty they have
producing weekly consumption estimates due to a lack of hard
data on oil exports.
For now, the agency relies on other, less speedy sources,
such as the U.S. Census, for export data, which is used to
produce its more definitive monthly oil data sets, but these
June monthly data will not be available until the end of
August. By the time we can look at August gasoline demand the
focus of the market will be on winter.
Collecting weekly export data would help, EIA analysts
acknowledge, but may be beyond its means as spending cutbacks
loom in Washington.
For now, market participants should be aware of the risks
of accepting at face value the EIA's estimate of demand on a
The more interesting question is to look at what is going
on in the U.S. gasoline market this year.
Certainly it seems that if it is a U.S. economic slowdown
depressing gasoline demand, it started earlier and is more
pronounced than optimistic commentators have assumed.
Over the first five months of the year, only February
showed higher gasoline demand in 2011 than 2010 based on the
monthly EIA data. Moreover, both April and May showed
Adjusting the four-week moving average on the weekly data
from the end of June and July and the most recent reading for
August down by the error rate seen this year suggests the U.S.
may have gone through the bulk of the summer burning less than
9 million barrels per day of gasoline.
Even if the weekly overestimate is not as high as it was
earlier in the month, U.S. gasoline demand will almost
certainly come in below 2010 levels for June, July and August,
given the weakness of the weekly readings.
This demand weakness seems to reflect the wider struggles
of the U.S. economy. U.S. GDP growth in the first quarter was
revised down sharply to a mere 0.4 percent, in part due to a
revision in the way petroleum imports are accounted for.
Early indications for second quarter growth are also
So gasoline demand destruction is well and truly underway
in the United States. Whether it is permanent or temporary
seems an academic dispute.
What is clear is that demand for gasoline in the world's
largest consumer of the fuel is presently going down and may
well weaken substantially more if a full blown recession
(Editing by David Gregorio)