Memorial Day weekend, the typical start of the summer driving season in the United States, will offer some clues to gasoline demand and driving behavior after the blockages eased in America.
Gasoline demand in the United States – which was on average 9.28 million barrels per day (bpd) or nearly 10 percent of global daily oil demand in 2019 – during Memorial Day holiday weekend will serve as a gauge for travel behavior after the big COVID-19 lockout has been relaxed with reopening of the 50 states at least to some extent. Gasoline demand in the United States has recovered from the lows seen in late March and early April. However, it is still about 30% below “normal” levels, especially for this time of year at the unofficial start of the summer driving season. The oil market and analysts will be watching to see if initial pent-up demand in the first two weeks of May after easing the blockages can be maintained and improved over the summer.
This start to Memorial Day for the driving season will be like no other. It is not known how many Americans will hit the road this weekend, and no one dares to screen. As the holiday weekend approaches, average gasoline prices in the United States are the lowest in 17 years. However, it is not known how many Americans will travel after the blockages have been eased, and after an estimate 38.6 million people have lost their jobs since late March. In the last reporting week, until May 16 only, more than 2.4 million people has filed for unemployment insurance, the US Department of Labor announced on Thursday.
Related: Natural Gas Drillers Face Price Merger As Storage Fills Up Quickly The uncertainty about the number of Americans who will travel at the start of the driving season is so great that even AAA did not issue a trip forecast for Memorial Day weekend for the first time in 20 years, as “the accuracy of the economic data used to create the forecasts has been compromised by COVID-19”.
“Last year, 43 million Americans traveled for Memorial Day Weekend – the second highest volume of travel ever recorded since AAA began tracking vacation travel volumes in 2000,” said Paula Twidale, Senior Vice President, AAA Travel. “With the social distancing directives still in force, the volume of travel for this holiday weekend should reach a record level. “
The lowest trip figures for Memorial Day weekend so far were recorded in 2009, near the end of the Great Recession, with 31 million travelers, including 26.4 million by car.
This weekend could hit a record high, but travelers have started booking vacations for later this summer.
“AAA.com/travel online bookings have increased, albeit modestly, since mid-April, suggesting that traveler confidence is slowly improving. When it is safe to travel, AAA predicts that vacationers will have a preference for American destinations, primarily local and regional locations, and the great American road trip, “said AAA.
What could be the record low number of trips for Memorial Day weekend at gas prices for this time of year in their lowest since 2003.
“However, as the country continues to practice social distancing, this year’s informal kickoff will not drive the millions of typical Americans to travel,” said AAA spokesperson Jeanette Casselano, at the start of this week.
“Millions of Americans are grappling with job losses and although gas prices have rebounded slightly, the start of low-cost summer can offer a respite from the difficult economic conditions many are trapped in,” Patrick De Haan, responsible for petroleum analysis at GasBuddy, said this week.
“Americans reluctant to fly or train for the holiday weekend, which is expected to continue throughout the summer, gas prices may continue to rise slowly, but prices will remain at a high discount compared to last year to take into account the situation: gasoline demand has not been as low to start the summer for decades, and gas prices reflect this situation, “said De Haan.
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Gasoline demand jumped from very low levels when many US states reopened in early May, but after a week or two, the trend in gas demand has stabilized, analysts said.
“There is an improvement, but in the last 10 or 15 days, we have really stagnated. It’s really societal behavior, not state-level policies that drive demand for gas, “said Michael Tran, global energy analyst at RBC. CNBC’s Patti Domm.
EIA data watch this gas demand for the week until May 15 was 6.79 million b / d, up from two weeks ago, but lower than the demand by 7.398 million b / d for the previous week until ‘to May 8.
Social distancing and travel behavior and the state of the US economy, including the unemployment rate, will shape the trajectory of the recovery in gasoline demand in America. Memorial Day weekend could offer an early glimpse into travel and driving habits in a post-coronavirus world.
By Tsvetana Paraskova for Oilprice.com
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