US gasoline imports 40% below 5-year average heading into driving season

US gasoline imports have dropped well below the 2015-2019 average, despite the kick-off of the peak gasoline season. The US driving season, which ranges from Memorial Day (the last Monday in May) to Labor Day (the first Monday in September), represents the peak season for supplied and imported gasoline in the US. Nonetheless, as we have often experienced so far in 2020, the story is different this time around.

The Covid-19 containment measures have caused US demand for gasoline to drop dramatically in recent months. Although gasoline imports have picked up over the past weeks, data suggests that imports remain 40% below the 2015-2019 average (on 15 May 2020), with just 526 thousand barrels imported per day.

A fling of the past
The pick-up in demand traditionally seen as US citizens take to the road during the driving season, normally translates into a rise in demand for product tankers. However, in recent years, the positive relationship between the US driving season and product tanker earnings on the trans-Atlantic trade has faded and now appear to be a fling of the past.

In the past five years, product MR tanker earnings on the Rotterdam-New York fronthaul have almost moved inversely with the driving season, underscoring that the general market conditions in the product tanker market dictate the ultimate fate of earnings, even if demand is up on this particular trade. Additionally, the increased refinery capacity has reduced the US’ reliance on transatlantic oil product imports.

Product tankers, and the oil tanker market in general, has in recent months experienced unprecedented levels of volatility which are likely to go down in the history books. With the OPEC+ alliance closing the tap for the flood of crude oil in the market by the end of April, causing oil prices to stabilise and demand for floating storage to decrease, the product tanker market is now forced to wrestle with oil product demand destruction on an unparalleled scale. Earnings for an MR product tanker on the Rotterdam–New York trade is currently at USD 12,425 per day, 83% below the earnings seen a month ago.
Source: BIMCO