U.S. Fuel Demand Levels Mixed Pre-Liberation Day

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The demand for fuels in the U.S. economy moved lower as consumers fret over sweeping tariffs and the fate of the economy, though data are fluid as jet fuel demand showed a 4.2% increase from year-ago levels.

Consumer confidence in the U.S. economy is faltering. Tariffs, which are a tax on imports, are creating inflationary fears and The Conference Board last week reported that its consumer confidence index fell to its lowest point since January 2021.

That was before U.S. President Donald Trump made good on sweeping tariffs on countries from China to the European Union. Trump imposed a general 10% tariff on U.S. trading partners, though that level varies by country. China, the second-largest economy behind the United States, saw tariffs reach 54% under his new order.

Data from the Energy Department show that the consumer appetite for fuels was already diminishing before the tariff announcement.

Travel club AAA reported a national average retail price of $3.26 for a gallon of regular unleaded gasoline on Thursday. That's about 3% higher than week-ago levels, but 8% lower than at this time last year.

Nonetheless, data from the U.S. Energy Information Administration (EIA), the statistics arm of the Energy Department, reported that the total amount of refined petroleum products supplied to the domestic market, a proxy for demand, was down 1.8% from year-ago levels.

For just motor gasoline, the total amount supplied over the four-week period ending March 28 averaged 8.8 million barrels per day (BBL/d), down about 2% from the same period last year.

That's not the entire story, however. Distillates, a refined petroleum product that includes diesel, saw demand tick up 3.7% from last year, while the amount of jet fuel supplied to the market showed a 4.2% increase from the same four-week period in 2024.

The total amount of jet fuel supplied to the market during the prior week was the lowest point since February 2024.

At around 2.5 million through the seven-day period ending April 1, data from the Transportation Safety Administration show the amount of people moving through airport security for travel was comparable to year-ago levels.

With summer approaching, demand would be expected to increase, both in jet fuel and retail fuels, though it's uncertain what Trump's trade policies will do to future demand.

The Federal Reserve Bank of Atlanta, however, was already pointing to a sharp contraction in the U.S. economy. Its GDPNow model showed real gross domestic product growth, when adjusted for inflation, pointing to a 3.7% economic contraction for the first quarter, worse than its forecast from March 28 for a 2.8% contraction.

In a Thursday morning newsletter, Ole Hanson, the senior commodities analyst for Saxo Bank in Denmark, said Trump's policies will all-but certain create more economic headwinds.

"What Trump delivered on this so-called Liberation Day was an economic war declaration likely to cause chaos across global supply chains, while in the short-term raising the risk of an economic fallout, hurting demand for key commodities, with energy and industrial metals being the sectors most at risk," he said.

Stock markets were mixed in early Thursday trading, though commodities took a hit. Trump exempted oil and gas imports from tariffs, though the overall mood on demand is negative.

West Texas Intermediate, the U.S. benchmark for the price of oil, was down 7% in pre-open trading to move in the range of $66 per barrel.

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