Black gold retreated on a market disappointed by new stock figures which confirm the sluggishness of demand for gasoline in the United States.
Second part of my article entitled: “Oil Is Correcting Despite Concerns Over Rates and Crude Demand”.
The market was also led by gasoline this week, after further disappointing weekly figures, as gasoline deliveries fell 4.6% last week in the United States compared to the previous period, according to the United States Energy Information Agency (EIA) – the volumes are about 4% lower year-on-year (YoY).
U.S. Gasoline Inventories
Thus, under the effect of this contraction in demand, gasoline stocks increased by 1.3 million barrels in the United States, while analysts saw them lose over 1.25 million barrels:
Meanwhile, the U.S. refinery utilization rate climbed to 91% from 89.3% in the prior period – the highest since December 2023.
As a result, gasoline availability remains plentiful, undermining prices.
U.S. Gasoline Production
The previous data should be put into perspective with the gasoline production figures below:
Overall, the data indicates an increase in gasoline stocks and a decrease in gasoline production in the U.S., which may suggest a potential oversupply of gasoline in the market.
Therefore, following the publication of these figures, the wholesale price of gasoline in the United States fell, closing nearly 4% down.
Technical Charts
WTI Crude Oil (CLM2023) Futures (June contract, 30m chart); RBOB Gasoline (RBM2023) Futures (June contract, 30m chart)
Orange discontinued line: time when the weekly publications were released by the U.S. Energy Information Agency (EIA).
RBOB Gasoline – WTI Crude Oil (42*RBM2023-CLM2023) Futures Spread (June contracts, 30m chart)
Conclusion
In general, changes in the above RBOB Gasoline – WTI Crude Oil futures spread chart can be an important indicator of the relationship between gasoline and crude oil markets, as well as broader economic conditions.
As gasoline prices are falling relative to crude oil prices, it just means that the demand for gasoline is getting weaker, possibly due to economic factors such as a potential slowdown in consumer spending.
Do you believe there might be a potential slowdown in consumer spending? Or do you think this could be due to a decrease in driving?
In my next oil trading alert (OTA), I will show various ways to potentially take advantage of a slowdown in consumer spending – to be released as Premium content next week…
Have a great weekend!
Sebastien Bischeri,
Oil & Gas Trading Strategist