Magellan anticipates 25pc drop in 2Q fuel demand

Magellan Midstream Partners has planned for a 25pc decline in gasoline and aviation fuel demand in the second quarter across its midcontinent and US Gulf coast fuel distribution system, the company said today.

The outlook included a 5pc decline in diesel demand compared to the same period of 2019. But there were many uncertainties in predicting fuel demand as communities try to mitigate the coronavirus pandemic.

"We are in somewhat uncharted territory in trying to predict what refined product demand will do," chief executive Mike Mears said on an analyst call.

The Magellan pipeline system moves fuel from Texas to New Mexico and to 46 terminals throughout 13 midcontinent states. The system moved 45pc of the gasoline and diesel consumed in Iowa, Minnesota, South Dakota, Arkansas, Nebraska, Kansas and Oklahoma in 2019.

The pipeline system was operating normally today. Magellan moved to separate control centers to limit infection risk, the company said.

The outlook was based on conversations with major refineries shipping on the Magellan system. Gasoline demand over the past seven days was down 10pc compared to the same week of 2019, and diesel effectively flat, the company said.

Demand would begin recovering in June and July, under the outlook.

By Elliott Blackburn