The decline in gasoline demand has sparked anger in the markets due to the US data

The most watched US government energy data in the world is raising an extraordinary amount of confusion and even skepticism in some corners.

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(Bloomberg) — The world’s most-followed US government energy data is raising an extraordinary amount of confusion and even skepticism in some corners.

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The Energy Information Administration reported that the average four-week supply of gasoline, a proxy for demand, last week fell from the same time in 2020, when the country was in the midst of the COVID-19 pandemic. The report sent New York gasoline futures trading down as much as 25 cents a gallon in daily trading. While the pressure of higher prices was very real for most American drivers and was expected to curb consumption, the extent of the decline came as a surprise to many.

“It’s the first time I’ve noticed weak gasoline demand in the face of a strong job market,” said John Kilduff, founder and CEO of Again Capital. He said strong employment and low prices indicate that EIA demand data is anomalous.

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The United States is the only major consumer and producer of oil that provides such detailed data on the state of supply and demand for national oil. EIA provides weekly and monthly reports, keeping stock of inputs and outflows from domestic stocks and providing a measure of transparency for often opaque markets. Data often affects energy markets, so its accuracy and safety are critical.

To be sure, there are plenty of legitimate reasons for lower gasoline demand: more people are working from home, historical inflation is shrinking household budgets, cars are more fuel-efficient, and pump prices – despite continuing declines – are still nearly 30% higher than for the year. past, according to the AAA Automobile Club.

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However, the EIA data appears to differ with other measures of demand, which paint a more rosy picture. The agency number provided by the agency measures the amount of products that have left primary storage locations – eg, refineries and bulk stations. It does not track the number of gallon drivers purchased from gas stations. In the same week that the EIA said the amount of gasoline supplied had fallen below levels from the first Covid summer, another gauge of demand showed it was rising. According to GasBuddy, which looks at transaction volumes at 150,000 stations, retail gasoline demand reached 9.542 million barrels per day in the week ending July 24, the highest so far this year.

“While gasoline demand has lagged behind our expectations with our trend in the summer, the one-week gasoline supplied from the DOE report can be highly volatile from week to week and does not necessarily reflect demand trends,” Matt Murphy said. , director of energy research at Tudor Picking Holt & Co.

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The apparent difference in demand for gasoline and ethanol, which blends with fuels, is also baffled by some. Most road gasoline is blended with 10% ethanol, yet blending remains well above 2020 levels, leaving some questions about gasoline demand moving in another direction.

“We won’t have an explanation at this point,” said EIA spokesperson Chris Higginbotham, when asked about the potential anomaly.

Monthly gasoline demand data from the EIA can vary widely from the weekly figure. The monthly figure for December, released on the last day of February, was 777,000 barrels per day higher than the weekly figures suggested during that time frame, a difference of 9%. It would be squarely within the EIA’s typical margin of error if monthly data for July released at the end of September showed increases of several hundreds of thousands of barrels per day.

Higginbotham said the weekly numbers are generated from a survey of a sample of respondents, while the monthly numbers come from the survey’s participant count.

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