Storage levels swelled last week to 259 million barrels, the highest in EIA records dating to 1990
A gasoline glut brought on by drivers buying less at filling stations is emerging as one of the biggest threats to the yearlong oil-price rally.
U.S. gasoline consumption plummeted last month, nearly matching a 15-year low, government estimates show. It fell to as low as 8.2 million barrels a day, averaged over the four-week period ended Jan. 27.
January sales at the pump fell 4.4% from a year ago, according to data from the Oil Price Information Service. That has led to a record amount of surplus gasoline, the U.S. Energy Information Administration said Wednesday. Storage levels swelled last week to 259 million barrels, the highest in EIA records dating to 1990.
“It was a poor January by any stretch of the imagination for gasoline,” said Tom Kloza, the Oil Price Information Service’s global head of energy analysis.
This drop-off in demand would be unlike any other outside of a recession, according to Goldman Sachs Group Inc. It is leaving many analysts befuddled. Some question the data. Others attribute the decline to storms and poor weather. Drivers may be put off by pump prices 31% higher than a year ago, according to the EIA. Many analysts expect demand to rebound in coming weeks.
The country’s cost of living did increase in January by the most in four years in big part from rising gasoline prices, the Labor Department said Wednesday. Its data showed pump prices up 7.8% from December to January.
Those prices may have to fall to boost consumption. Otherwise oil markets may be faced with budget-conscious consumers leaving a glut lingering for months, maybe until the late spring or summer when driving peaks.