Drop In Gasoline Consumption As Fuel Efficiency Technologies Outpace Demand

Energy futures are taking a breather this morning after a 3-day rally saw prices break through a handful of moving averages on the WTI, RBOB, and HO charts. The crude oil benchmark is leading the way lower, trading down 1% (~75 cents per barrel) so far this morning, while the prompt month gasoline and diesel contracts drift 25-50 points in the red.

The American Petroleum Institute’s weekly inventory estimates are being blamed for this morning’s price weakness. Headline values showed a sizeable build in crude oil stockpiles last week of just over 9 million barrels. National gasoline and diesel inventories drew down slightly, shaving off 2.5 million barrels and 590,000 barrels, respectively. The Department of Energy’s official report is due out at its regular time this morning.

Unsure of where oil prices will be for the next couple years? The EIA’s got you covered. In their monthly Short-Term Energy Outlook published yesterday the Administration predicts (with 95% certainty) that domestic crude oil prices will be between $40 and $120 per barrel through 2027. If more short-term guidance is needed, they also forecast that crude oil prices will stay “near current levels” for Q1 2025. As for the rest of 2025, they expect prices to trend lower, citing gradual increases in production and slower-than-expected demand growth.

Of a little more substance: the STEO is forecasting a drop in American gasoline consumption by the end of 2026, citing fuel efficiency technologies outpacing consumer demand growth. Demand is expected to grow on the distillate side of the barrel with increased industrial activity driving the need for diesel while increased air travel, as seen in both passenger volume and flight departures, spur growth in jet fuel demand.

It sounds like the aforementioned gradual increase in crude production won’t be coming from OPEC+ member nations. The cartel has reiterated their commitment to maintaining their voluntary production cuts, despite the President’s calls to reverse them in order to drive prices lower. The door has been left open to start increasing production in April, with the small caveat that it must be economically viable to do so.