The U.S. Energy Information Administration (EIA) has recently puzzled oil market watchers and participants with a considerable upward revision to America’s oil consumption and implied gasoline demand for May.
EIA’s weekly data releases for that month painted a picture of tepid U.S. gasoline demand, which contributed to a decline in international oil prices and added to concerns about demand in the world’s largest oil consumer.
However, the monthly update for May, published with a two-month lag compared to the weekly EIA inventory and supply reports, showed materially higher implied U.S. gasoline and overall oil demand.
The traders and analysts who are closely tracking EIA’s weekly reports for trade signals and demand outlooks were left confused by the contradictory weekly-versus-monthly data.
That’s nothing new; weekly data is more on the side of estimates and preliminary data, and there have always been discrepancies in these figures.
But the latest monthly update for May shows a margin that is too wide. This could mean two U.S. oil demand narratives for each of the data points.
According to the EIA, the weekly figures for May differed so much from the monthly data due to overestimated gasoline output and undercounted exports, Reuters’s Shariq Khan notes.
The EIA seeks to show general trends in demand in weekly data.
The administration always looks to align weekly and monthly data more closely, a spokesperson for the EIA told Reuters.
The agency has made several changes to both data points in an effort to better reflect the state of the U.S. petroleum market, the spokesperson said.
One may ask what the big deal is in some revisions to data.
It’s that the weekly estimates showed a weak start to the summer driving season, with demand trailing last year’s levels, while the monthly status report suggested American oil demand set a seasonal record-high for May and gasoline demand was at its highest level since the pandemic—the most since August of 2019.
The EIA’s Petroleum Supply Monthly showed that America’s total crude oil and petroleum product supplied, the proxy for oil demand, was at 20.8 million barrels per day (bpd) in May—the highest-ever for the month of May and highest since August 2023. The figure was 792,000 bpd higher compared to April.
Supply of finished motor gasoline—the EIA’s proxy for gasoline demand—stood at 9.396 million bpd for May, the monthly data showed.
This is a post-pandemic high, with the most gasoline supplied since August 2019.
Yet, the weekly reports in May have shown that implied gasoline demand was 380,000 bpd lower than that figure. At just over 9 million bpd in May, the weekly reports back then showed weaker gasoline demand compared to more than 9.1 million for the same month in 2023.
These large discrepancies are puzzling the market, although participants and analysts react more to the weekly data than to figures published with a two-month lag.
Traders and analysts look at many other data releases from private firms tracking supply and demand to assess U.S. oil demand.
Data from fuel-tracking platform GasBuddy has shown that May’s gasoline demand was 8.87 million bpd, which is closer to the EIA’s weekly estimates than the monthly status report.
Patrick De Haan, head of petroleum analysis at GasBuddy, said last week, commenting on the EIA’s upward revision to oil and gasoline demand, “GasBuddy data suggests that gasoline demand is nowhere near what EIA is printing. Take that as you will.”
But more recently, gasoline demand has been tracked as very strong in the past week, per GasBuddy’s data and analysis.
GasBuddy data models U.S. gasoline demand last week at 9.28 million bpd, which is “the highest tally of 2024,” De Haan said on Monday.
Traders and analysts will watch the next monthly reports from the EIA to see if the conflicting data suggests two very different demand pictures and outlooks for the U.S. summer oil and gasoline demand.
By Tsvetana Paraskova for Oilprice.com
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There is an estimated difference of up to 2.0 million barrels a day (mbd) between the weekly and monthly data and I remember very clearly veterans of shale oil warning the EIA years ago about this discrepancy and asking it to reconcile its weekly and monthly data to eliminate confusion to no avail.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert