Below Average Gasoline Demand Could Help Slow Pricing Pressures

Despite RBOB gasoline rising since the start of the year by around 30%, seasonally low demand is likely to helping cap pump price rises as the US election campaign gets into full steam.

• Before April, implied gasoline demand had improved for seven consecutive weeks but has since fallen by 150k b/d in the last two weeks.
• “That certainly weakens the trajectory for gasoline consumption heading into the summer driving season, although that’s been par for the course over the last two years,” Bloomberg said.
• While gasoline prices are expected to pick up as driving season approaches, price increases could be moderated should demand remain seasonally low, helping to at least slow the influence of energy prices in upcoming inflation numbers.
• The Biden administration may also look to release stocks from the SPR to try and tame the market.
• For March CPI, energy prices rose 1.1% on a seasonally adjusted basis (vs +2.3% prior), contributing approximately 8 basis points to monthly headline CPI growth of 0.4% on the month and 3.5% on the year.