US transport fuel demand could fall 155,000 barrels per day in 2026, even as strong margins and exports keep refiners running near record utilization, Kpler said in a Wednesday note.
US refinery utilization stayed above 95% through much of summer, reaching about 98% in late August as refiners maximized output amid strong margins and export demand.
August crude processing approached 17.3 million b/d, as restricted Russian and Middle Eastern product supplies increased global reliance on US refined barrels, Kpler said.
Kpler expects refiners to maintain strong activity into autumn as September-November maintenance remains historically light.
US refinery runs should average 16.9 million b/d from September through December, about 450,000 b/d above a year earlier and 500,000 b/d to 600,000 b/d above seasonal averages.
However, sustained utilization leaves refiners with little spare capacity, increasing their exposure to unexpected outages, Kpler said.
Transport fuel demand held broadly steady year over year during Q1 but should decline about 230,000 b/d in both Q2 and Q3, with weakness continuing into Q4.
Gasoline will account for most of the 155,000 b/d decline, while diesel demand should decrease about 35,000 b/d and jet fuel consumption could rise 5,000 b/d, below the roughly 30,000 b/d growth forecast in February.
Diesel demand should fall about 22,000 b/d in PADD 3 and 13,000 b/d in PADD 5, while consumption across other regions remains broadly stable, Kpler said.
Gasoline demand now looks set to contract 125,000 b/d in 2026, versus Kpler's earlier 35,000 b/d forecast, with declines of 170,000 b/d in Q2 and 190,000 b/d in Q3.
PADD 3 should post the largest gasoline decline at 80,000 b/d in 2026 after falling 100,000 b/d in 2025, while PADD 5 and PADD 1 could drop 30,000 b/d and 20,000 b/d, respectively.
Elevated gasoline prices drove much of the Q2 deterioration, with the US-Iran conflict pushing average US gasoline prices over 28% higher year over year from April to August and demand expected to fall by 190,000 b/d in Q3.
Gasoline demand could weaken further if elevated prices persist, limiting driving and discretionary travel, even as US refiners maintain high output to meet global demand for US barrels, Kpler said.