Demand for gasoline climbed last week and helped to drive a second consecutive gain in U.S. petroleum consumption, while oil production leveled off, new federal data show.

The U.S. Energy Information Administration (EIA) said Wednesday overall demand for petroleum products for the period ended Dec. 16 climbed 5% week/week. The increase was driven by a 6% jump in gasoline consumption, according to the agency’s latest Weekly Petroleum Status Report. This followed a 2% increase last week.

Demand rebounded in 2021 and, overall, held at solid levels this year – well above the pandemic lows of 2020. But it has proven choppy. Analysts are concerned it may falter next year amid an anticipated economic slowdown in the United States and globally. During periods of recession, travel tends to ebb and demand for gasoline and other fuels declines in tandem.

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“I think there are valid concerns about demand,” East Daley Analytics’ Robert Wilson, vice president of analytics, told NGI.

Total petroleum products supplied over the last four-week period averaged 20.1 million b/d, down 4% from the same period last year, EIA reported. Over the same period, motor gasoline consumption averaged 8.4 million b/d, down 7%, while distillate fuel demand averaged 3.7 million b/d, down 9%. Jet fuel product supplied proved the exception over the past four weeks, rising 10% compared with the same period in 2021.

In its latest monthly market report, OPEC forecast global oil demand growth this year of 2.5 million b/d, followed by another 2.2 million b/d of growth next year. But the estimates were lowered from outlooks earlier in the year, in large measure because of recession threats and uncertainty caused by Russia’s war in Ukraine.

The cartel noted the potential for recently eased pandemic restrictions in China to drive fresh demand there, offsetting expectations for sluggishness elsewhere. But OPEC’s researchers and other analysts said the growth outlook is vulnerable to further downward revisions because of the Chinese government’s penchant to lock down major cities to tamp down even minor outbreaks of coronavirus.

“China is a big deal, but there is a big wildcard there,” Wilson said.

The Saudi Arabia-led cartel and its allies, aka OPEC-plus, in November launched a program to cut collective production by up to 2.0 million b/d after several months of increases.

Analysts at ClearView Energy Partners LLC noted that EIA previously projected that about 60% of the anticipated global demand gains next year would come from China. Much of the gain is expected from increased air travel within Asia’s largest country.

“In our view, a high concentration of demand growth from a single country or a single refined product seems likely to increase the risk of a consumption shortfall, which we regard as a bearish signal for oil prices,” the ClearView analysts said this week.

Brent crude, the international benchmark, traded near $82/bbl intraday Wednesday, off from highs above $120/bbl earlier this year.

The relatively weak prices of late help to explain why OPEC-plus pulled back on production and why U.S. output flattened last week at 12.1 million b/d. Domestic output had dipped 100,000 b/d the week before.

U.S. commercial crude inventories, excluding those in the Strategic Petroleum Reserve, decreased by 5.9 million bbl last week. At 418.2 million bbl, U.S. stocks were 7% below the five-year average.