US gasoline and diesel demand recovers sharply, forecasts EIA

London (Quantum Commodity Intelligence) - The inflation in US gasoline and diesel retail prices will last throughout the year amid rising crude prices and a better-than-expected recovery in demand for road fuel, the US Energy Information Administration forecasted in its short-term energy outlook for June.

Pump prices for gasoline are expected to average $2.89/gal and diesel prices $3.13/gal in the third quarter, up 5.1% and 5.5% respectively from the May forecast.

Fourth-quarter forecasts were raised 4% from May for gasoline to $2.62/gal and 4.1% for diesel to $3.07.gal.

But prices will peak in June and slip lower to September as domestic supply rises from US refineries, according to the EIA.

Summer US gasoline demand has improved.

The EIA expected US gasoline consumption will average 9.1 million bpd between April and September, up a sharp 1.3 million bpd from the May forecast, although still more than 0.4 million bpd lower than the actual summer 2019 figure.

Part of this revision reflects the impact of the Colonial Pipeline outage, although "consumption both before and after this event indicate more gasoline demand than we had previously forecast," the report noted.

But the ability of US refiners to plug the gap in demand has undermined demand for barrels from Europe.

Exports of European gasoline to the US fell to a three-month low of 1.6 million mt in May, according to Vortexa, quoted by Argus Media.

Overall, European gasoline exports in May were little changed from April, rising to 4.6 million mt from 4.5 million mt.

Refining margins for European summertime gasoline prices have been trending lower since May 5, Quantum data shows.