(Bloomberg) -- For all the optimism over a recovery in oil demand and prices, the weekend that heralds the U.S. summer driving season proved to be a damp squib.
While beaches were open and states across the country emerged from coronavirus-related lockdowns, demand for gasoline ended up falling over the Memorial Day holiday weekend. That may have been because people kept their driving local, when in previous years they had traveled farther, according to Andy Lipow, president of Lipow Oil Associates LLC in Houston.
The lackluster start to what is typically considered the season for peak American fuel demand shows how vulnerable the oil market remains as the fallout from the coronavirus crisis haunts economies. Crude prices have surged about 80% this month, after a historic collapse below zero in April, on supply cuts by major producers as well as optimism that consumption is recovering as lockdowns ease.
“The public stayed closer to home and consumed less gasoline because they were going to recreational venues nearby rather than traveling long distances around the country,” Lipow said.
Gasoline demand fell 1.34% from Thursday to Monday of the holiday weekend compared to the week prior, Patrick DeHaan, an analyst at GasBuddy, said in a tweet Tuesday. Consumption on Monday fell 0.5% from the week prior. Compared with a year earlier, gasoline use is estimated to have slumped 25% to 35% over the long weekend.
However, gasoline prices are on the rise. The national average price has risen for four consecutive weeks and gained 5.5 cents over the last week to $1.96 a gallon, according to GasBuddy.
In the San Francisco Bay area, for example, traffic across seven toll roads rose from a week earlier on Saturday and Sunday, according to data compiled by Bloomberg. Pennsylvania Turnpike Commission data shows traffic exceeded projections in each day of the four-day period.
“Average gasoline prices across the U.S. continue to recover as more motorists take back to the roads as states relax previous shelter-in-place orders and begin filling their tanks, driving demand to continue rising,” DeHaan said in a report.
©2020 Bloomberg L.P.