The US seems to be recovering from an unusual crash in oil and gasoline demand, for the time being at least.
After experiencing the lockdown for weeks, the US citizens are finally hitting the roads to go to parks, beaches, and stores, consuming more gasoline on the way. This is what making the US oil prices to rise from the ashes.
— Paul R. La Monica (@LaMonicaBuzz) May 8, 2020
RBC Capital Market’s analysis of traffic
The analysis from RBC Capital Market’s TomTom GPS data depicts that traffic in Atlanta, Dallas, and Houston – Texas’ three biggest cities where they eased up the social distancing recently – is increasing a little bit. During the hard days, traffic was reduced to 83 percent below the average levels in some of the major cities of United States. However, that number recently tweaked up to a negative 74 percent.
Even the traffic rush in New York City, where lockdown is still imposed to fight the virus, has increased lately. According to RBC, NYC traffic was at its lowest to 96 percent below the average in April, but now, it has reached 88 percent below normal.
What Michael Tran says about the increase?
The director of RBC’s global energy strategy, Michael Tran, stated that Demand in America had hit the ground.
The director pointed several indicators behind the rise, such as relaxation of social distancing guidelines in different states i.e., Texas and Georgia, ‘Cabin Fever’, and hot weather.
On Wednesday, the demand for gasoline in the USA spiked up to the highest level of that week since 18 March 2020, says GasBuddy. They further added demand on Wednesday was 16 percent greater than the 25 March’s low, whereas it was still 31 percent lower than the 11 March’s when they started imposing stay-at-home orders.
In a nutshell, the demand for oil and gas is still weak; it is just not as terrible as it was before. GasBuddy’s oil and refined products analyst Patrick DeHaan said, ‘even though it is a recovery.’
There are some other indicators too that suggest US people are starting to move out again.
Orbital Insights, which is a research facility that uses AI and supercomputers to analyze data, scoured through thousands of anonymous cell phones daily to find out how far they move from home. The organization saw that mobility was crashed down to 66 percent below average in April. But recently, it came around 29 percent from average.
Trump is happy about oil ricochet
On Tuesday, Donald Trump expressed his happiness upon oil rebound by tweeting that oil prices seem to be rising as demand increases again.
Oil prices moving up nicely as demand begins again!
— Donald J. Trump (@realDonaldTrump) May 5, 2020
Last month, the prices for US oil collapsed down to negative for the first time ever in history, a move that put a fear that the world might not be left with a much room to store the oil barrels that were piling up during the COVID-19 outbreak.
American crude oil revived back to life after hitting the bottom line at -37 dollars per barrel on 20 April 2020. This week, it has increased 17 percent to 23.55 dollars per barrel.