Sure doesn’t look like Kansas anymore! Know what? Maybe the abnormal is the new normal!
It could be just me, but the emotion is starting to leak out of the pandemic balloon.
Is the energy market and its consumer base now yelling “uncle” and living with the doom and gloom headlines, and just moving on?
Have we had enough of hiding behind our curtains waiting for the latest COVID storm to pass?
Sure looks that way!
That’s according to the supply and demand balance sheet from the latest EIA inventory report.
Demand for all fossil fuel derived products is definitely roaring back in the face of the latest variant, and seemingly challenging all comers.
On the supply side, crude oil inventories fell by close to five million barrels and are now 7% below the 5-year average.
Distillate levels, the key driver for gasoline prices at this time of year, dropped by three million barrels.
So, supply is tight.
This could get tighter when you see gasoline demand up 15% versus the same four-week period last year. The same goes for distillates with inventories down 10% but demand up 11%.
What is happening however, is that the consumer is reacting to the pandemic in true Darwinian fashion by adapting to the energy environment.
Travel restrictions that are being applied to stem the advances of the latest omicron variant have slowed the rate of demand growth for jet fuel.
While the gasoline rate of demand has increased, the demand for jet fuel has decreased. This means that the consumer has realized that a trip to the airport is a waste of time because there is nowhere to go.
Their default option is to stay home and drive, drive, drive.
Gasoline pump and diesel rack prices will have no option but to go up, up, and up.
– Roger McKnight – B.Sc., Senior Petroleum Analyst
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