Summer US gasoline demand will exceed production and imports
Gasoline has been the lone bright spot of the oil market
Gasoline demand and cracks have been the sole areas of strength in the oil
complex this year. Demand, both in the US and in Asia, has been
supported by strong consumer spending and low retail prices, with
margins further boosted by refinery issues in the US West Coast and
strong import demand for octanes from Asia. We expect this demand
strength to persist although with growth halving in 2016 given high base
demand in 2015 and sequentially stable oil prices. Importantly, our US
demand growth forecast accounts for continued fleet efficiency gains, with
recent data and rising SUV sales suggesting instead that such gains may
be stalling. Further, lower Chinese sulfur specifications will prolong the
competition with Europe and the US for clean components.