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Gasoline prices to remain elevated on back of strong demand during US driving season

Oil&Gas Materials 13 May 2022 11:51 (UTC +04:00)
Gasoline prices to remain elevated on back of strong demand during US driving season
Laman Zeynalova
Laman Zeynalova
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BAKU. Azerbaijan. May 13. Gasoline prices will remain elevated over Q322 on the back of strong demand during the US driving season, however risk of potential demand destruction is growing, Trend reports with reference to Fitch Solutions.

“We reported on first signs of declining demand on the back of surging fuel prices on the US gasoline market back in early April 2022 and we now are seeing growing risks of possible demand destruction in the US on the back of high-than-expected gasoline prices ahead of the Q322 summer season. That said, we wait for high-frequency data from the Department of Transportation to see if this trend persisted over April-May 2022. Weakening economic growth coupled with tighter monetary policy cloud our outlook for gasoline demand in 2022 however we note that strong private consumption, with low unemployment rate, support our positive outlook,” reads the report released by the company.

Fitch Solutions continues to expect prices to stabilize lower over Q422 as the demand weakens.

“In our core view, we expect gasoline crack spreads weakening by the year-end on the back of lower seasonal demand in the US. Thus, gasoline prices will settle lower, bringing the annual average to USD312/gal below levels observed in April-early May 2022. Other regions will follow a different demand story that could widen spread between regional gasoline benchmarks. Outside of the US, we point at China, where the zero-Covid policy continues to wreak havoc on fuel demand. We have revised down our fuel demand forecast for China, from a 4.5 percent y-o-y growth to 1.6 percent y-o-y in 2022 as anti-pandemic measures will likely remain in place for longer. Weak demand for fuels domestically puts pressure on Chinese refining sector and could prompt the government to permit refiners increase fuel exports to leverage strong margins abroad. A potential inflow of products from China to other countries could in turn loosen the markets and put downward pressure on the margins,” the report says.

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