Gasoline demand: Better late than never

Ethanol Report
By Rick Kment | May 15, 2013

April 29—Despite the pressure in the corn market seen over the past couple of weeks, there is a light at the end of the tunnel, so to speak. Both gasoline and ethanol prices are starting to rebound as demand for fuel starts to pick up speed in front of the summer driving season. Despite a 35 cent per gallon price erosion over the past months, in late April in just one week implied demand for gasoline rebounded and inventory levels started to fall. The outlook for ethanol demand has also improved over the past couple of weeks with inventory levels falling below year-ago levels.

For ethanol to maintain demand growth, gasoline demand needs to improve significantly. Ethanol usage throughout the country is directly correlated with overall demand for gasoline. There are still a lot of questions concerning economic strength that need to be answered over the coming weeks. But smaller inventory levels and increased implied demand in the latest U.S. Energy Information Administration report is creating hope that overall gasoline and ethanol demand may not be as sluggish as previously thought.