Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

The Energy Report: Gas Demand Gage

By Phil FlynnCommoditiesAug 09, 2022 09:34AM ET
The Energy Report: Gas Demand Gage
By Phil Flynn   |  Aug 09, 2022 09:34AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

Breaking News – Reuters Reports that Ukraine has suspended Russian oil flows to southern Europe since Aug. 4 because Western sanctions meant it did not receive transit fees from Moscow, Russia’s pipeline monopoly Transneft said on Tuesday. Transneft (TRNF_p.MM) said it made payments for August oil transit to Ukraine’s pipeline operator Ukrtransnafta on Jul. 22, but the money was sent back on Jul. 28 as the payment did not go through. Gazprombank, which handled the payment, said the money was returned because of European Union restrictions, Transneft said in a statement.

Better Check the Gasoline Demand Gage. Are consumers running on empty? Oil prices are starting to get their bearings trying to bottom in a market with low liquidity. Yet it may be a weakness in gasoline demand that is really reflecting how Americans feel about the struggling Biden economy. 

Oil prices are caught up trying to decide whether they’re more concerned about a looming recession or more concerned about the Fed being aggressive in raising interest rates. If the Fed stays aggressive, it will cause an increase in the value of the dollar, putting downward pressure on oil prices. 

The other concern, of course, is the stunning 7% weekly drop in gasoline demand reported by the Energy Information Administration (EIA). That was most likely caused by gasoline wholesalers putting off purchases in the hopes that they could buy supplies cheaper. Sometimes, that backfires because if prices spike back up, they may have to purchase more supply at a higher price in the future.

Yet the reality is that the drop in gasoline demand that everybody admits is happening to one degree or another is a reflection of how Americans are suffering under the Biden economic policies.

The war on fossil fuels and even his new so-called inflation reduction act will only make oil more expensive, thereby making gasoline prices more expensive. Also, the Biden crackdown on taxes on small businesses and new regulations will reduce U.S. oil production in the future. 

At least we know that China’s gasoline demand will improve. China has decided to lower retail gas prices! 130 yuan will reduce China’s domestic gasoline and diesel prices (standard products) and 125 yuan per ton, respectively. I don’t think that is going to help with Biden’s environmental plans. 

Gasoline demand is going to be one of the things that we’re going to be looking at with tonight’s American Petroleum Institute (API) report. Traders are going to see if the demand drop corrects itself or it is a sign that U.S. drivers are bucking under the pressure of the most aggressive inflation we have seen since the 1980s.

Some traders talked about the Iran nuclear talks and held out hopes for a deal. Do not bet on it. Apparently, there’s some plan on the table for the Iranians to look at from the Europeans at this point. Our expectations are that Iran is just using these talks to buy more time. It is what they call a final draft to revive the 2015 nuclear deal. Today Iran has already taken a major step to avoid sanctions in the future. Tasnim reported that Iran makes first import order using crypto, worth $10 million dollars.

All of that might be a moot point because, at the end of the day, global supplies of oil and refining capacity are still very tight despite all the concerns about slowing demand. We are seeing global oil inventories fall, the Strategic Petroleum Reserve releases have flooded the market with oil, but it is yet to stop global oil inventories from tightening. When the market wakes up to the reality that these barrels of oil aren’t going to be dumped onto the market in the winter, we should see solid buying come back in.

As I have pointed out before, the last two weeks of August are seasonally very bullish for oil, gasoline, and diesel. This year the move might be bigger than in previous years because of the overreaction to recession fears on the downside. 

Reuters reports that an inferno at Cuba’s largest oil storage facility has killed at least one firefighter, injured many more, and threatens to further swell the fuel import bill for the impoverished island nation that relies on foreign oil for everything from transportation to its power grid. Cuban officials may need to scramble to set up expensive floating storage capacity to handle imports aimed at easing an acute fuel scarcity, sources and experts said on Monday. 

Bloomberg News reports that China’s top auditor is conducting a review of the $3 trillion trust industry, paving the way for a potential overhaul of a key shadow banking sector where losses on property loans are mounting. In an unscheduled move, the National Audit Office — which previously led an examination of bank exposures to Jack Ma’s Ant Group Co. — has for the past month been inspecting the books of at least 20 trust firms, including the top five, to gauge the risks they pose to financial stability, according to people familiar with the matter. 

Biden is probably watching this matter with great interest. Besides, he has going to hire a bunch of IRS agents with a bunch of weapons. Maybe we can go back and audit the tax returns of the Tea Party as they did under Obama. 

Natural gas pulled back on weather forecasts showing some moderation in the heat. Yet the longer-term outlook still looks bullish. One of the things we must keep our eye on in this market is the storm that has developed in the Atlantic Ocean. The National Hurricane Center reports that a tropical wave continues to produce a large area of organized cloudiness and thunderstorms over the eastern tropical Atlantic a few hundred miles south-southwest of the Cabo Verde Islands. The gradual development of this system is possible, and a tropical depression could form around the middle to the latter portion of the week before environmental conditions become less favorable by this weekend. This system is expected to move westward to west-northwestward at 15 to 20 mph across the tropical Atlantic during the next several days.

The Energy Report: Gas Demand Gage

Related Articles

Chris Vermeulen
Gold: A Repet Of 2008?   By Chris Vermeulen - Sep 30, 2022 4

It has been an interesting year, with stocks down nearly 25% and the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) down over 40% since the 2020 highs. The passive buy-and-hold...

Phil Flynn
The Energy Report: Danger’s Lurking By Phil Flynn - Sep 30, 2022 1

Oil prices are still trying to bottom but are set for their first quarterly loss since 2020. The focus in the oil market is not about current supply and demand any more but the...

The Energy Report: Gas Demand Gage

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email