U.S. Fuel Demand Holds While Global Supply Tightens

U.S. fuel demand remains steady despite higher prices, even as stalled U.S.-Iran negotiations and restricted flows through the Strait of Hormuz continue to tighten global supply and keep crude markets elevated. Brent crude edged to $102/bbl, holding above $100 for the first time in more than two weeks, while WTI reached $92/bbl. Both benchmarks had rallied by more than $3 the day prior, supported by larger-than-expected draws in U.S. gasoline and distillate inventories and by a lack of progress in negotiations.

Data from the Energy Information Administration reinforces that point. Gasoline demand averaged 9.055 million b/d last week, slightly lower week over week and below last year, but still well above 2024 levels. The four-week average is also trending higher than 2025, suggesting that higher prices have not significantly disrupted driving demand. Distillate demand remains even more resilient, climbing to 4.032 million b/d and running ahead of the past two years, supported by steady freight and industrial activity.

Jet fuel demand, however, is moving in the opposite direction. Weekly demand dropped to 1.599 million b/d, down 281,000 b/d, and is now significantly below last year's levels. The four-week average is also trailing 2025, suggesting that elevated fuel costs are starting to weigh more on air travel than on other segments. This divergence is becoming more pronounced: essential ground transportation demand is holding, while discretionary travel demand is softening under price pressure.

Exports are helping absorb U.S. supply and rebalance global markets. Total refined product exports reached a record 8.083 million b/d, the first time exceeding 8 million b/d. Gasoline exports rose to 915,000 b/d, while distillate exports climbed to 1.601 million b/d, the highest level in four months. Jet fuel exports also increased to 370,000 b/d. These flows highlight how global supply disruptions are pulling more barrels out of the U.S., tightening domestic balances even as production remains strong.

That tightening is already visible in inventories. Gasoline stocks declined by 4.6 million barrels, marking the tenth consecutive weekly draw, with total inventories now slightly below the five-year average at 228.4 million barrels. The largest declines came from the Midwest and Gulf Coast, both of which are now below last year's levels. Distillate inventories fell by 3.4 million barrels and remain about 8% below seasonal norms at 108.1 million barrels, with particularly tight conditions on the West Coast. These sustained draws suggest that supply is struggling to keep pace with both domestic demand and export pull.

Refinery operations remain active but show some signs of constraint. Utilization slipped to 89.1%, while gross inputs declined to 16.18 million b/d, below levels seen in the same week over the past two years. Even so, production increased across all major products. Gasoline output rose to 10.076 million b/d, distillate production reached 4.953 million b/d, and jet fuel production climbed to 2.007 million b/d. Refiners are clearly trying to respond to demand and export strength, but lower utilization hints at operational limits or maintenance impacts.

Crude inventories add another layer to the picture. Commercial crude inventories increased by 1.9 million barrels to 465.7 million barrels, sitting about 3% above the seasonal average. Production edged down slightly to 13.585 million b/d, while imports surged by 787,000 b/d to 6.078 million b/d. Crude exports fell week over week to 4.798 million b/d but remain significantly higher than last year, underscoring continued global demand for U.S. barrels.

Overall, the market is sending a clear signal: even with crude prices back above $100 for Brent and in the $90s for WTI, demand for gasoline and diesel remains solid, inventories are tightening, and global buyers continue to pull barrels from the U.S. At the same time, jet fuel demand is weakening, highlighting where higher costs are starting to have the most visible impact.