NEW YORK: US gasoline demand has collapsed as stay-at-home orders keep drivers off the road, following the pattern seen in the hardest-hit parts of Europe.
Sales at retail stations were down 46.6% from a year earlier in the week ending March 28, according to a report from OPIS by IHS Markit. The average station sold about 41,639 litres — less than two tanker trucks’ worth.
The gasoline demand plunge accelerated as government orders on staying home became more widespread, dropping 30% in a week. The loss of consumption in the US echoes that of Spain and Italy, which imposed some of Europe’s harshest restrictions on movement. Demand there for gasoline was down about 85%.
Weekly US government data show that the least gasoline was supplied to the market since 1994. While the drop isn’t as drastic as at the retail level, it’s likely to increase as retailers take less fuel. Refineries are cutting back production as fuel piles up in storage tanks, in turn pushing down crude prices.
Globally, oil demand may shrink by as much as a third, according to some estimates.
European countries are also taking a hit. Gasoline demand fell 83% on an annual basis in Spain during the week ended March 29, according to pipeline operator CLH Group. In Britain, gasoline sales in late March were down by 66%, compared with an average during the previous two months, the UK Petrol Retailers Association said.
A survey of Dutch car dealers, driving schools and transport companies found that respondents lost almost half of their revenue on average as a result of the virus, according to industry group Bovag, which conducted the study.
"The Netherlands really has come to a standstill,” said Bovag spokesman Tom Huyskens. "Only those that really need it are driving, filling up their tank, but otherwise traffic has pretty much stopped.”
In the US, diesel demand hasn’t been hit as bad, as truck deliveries have continued. But Pilot Co., America’s biggest truck-stop company, is facing a 25% to 30% slowdown as the impact of coronavirus moves through the supply chain, keeping economic activity muted and workers at home, CEO Jimmy Haslam said in an interview.
"With big box retailers starting to slow and automakers shutting, we expect more slowdown in coming weeks,” he said.
Meanwhile, tthe world’s largest oil producers are hammering out the terms of an unprecedented deal to mitigate the devastating impact of the coronavirus crisis as they prepare for an extraordinary meeting this week.
Saudi Arabia and Russia are closing in on an agreement to curb output, which could drain some of the oil surplus threatening to overwhelm storage tanks and force a wave of abrupt production shutdowns, according to delegates involved in the talks. The two energy giants, together with others in the Opec+ alliance, will hold a virtual meeting on Thursday to finalise the accord.
A deal still hinges on some form of co-operation with the US. That may be difficult to achieve with President Donald Trump resisting any partnership with the OPEC cartel that he’s vilified for years. But the group is holding out hope for some kind of American involvement, and buy-in by others such as Canada and Brazil, at a gathering of Group of 20 oil ministers scheduled for Friday.
