crude oil futures (CL)

Crude Oil (CL) Futures Outlook: US Gasoline Consumption Drops

  • US gasoline inventories rose higher than investors expected.
  • Supply concerns eased after crude production resumed in Libya.
  • The Keystone Pipeline in Canada is still operating at reduced rates.

Today’s crude oil (CL) futures outlook is bearish as investors worry over demand after US data showed a drop in gasoline consumption. US West Texas Intermediate crude futures fell 48 cents, or 0.5%, to $99.40 a barrel following a 1.9% drop on Wednesday. The falling prices continue today, with crude futures costing $96 a barrel.

Analysts had expected US gasoline inventories to rise by 71,000 barrels, but data showed a 3.5 million barrel rise in the past week. This data comes during the US peak summer driving season, showing a significant drop in demand. The product supply of gasoline, an indicator of demand, was about 7.6% lower than the value a year ago.

“We are at the peak of the peak driving season, and gasoline demand is lagging,” said Stephen Schork, principal at The Schork Report.

“It seems higher prices are impacting demand, with gasoline demand seasonally low over the week once again,” said ING’s head of commodities research, Warren Patterson.

On the supply front, investors were relieved after the National Oil Corp (NOC) assured markets that crude production had resumed in Libya after the oil export force majeure lift. In Canada, operator TC Energy reported that the Keystone pipeline, a major oil export artery, was operating at reduced rates.

This pipeline ships around 590,000 barrels daily from Alberta to refineries in the US Midwest, and there is no clear timeline for when repairs will be completed. Demand concerns outweigh supply concerns, and crude prices are falling. This collapse might continue if demand remains low.

Crude Oil (CL) futures technical outlook:

Crude oil (CL) futures 4-hour chart
Crude oil (CL) futures 4-hour chart

The 4-hour chart shows the price breaking below the 30-SMA. This break signifies a change in the market trend from bullish to bearish. However, the 4-hour candle would have to close below the SMA to confirm this new downtrend. If it closes above, making a long wick, the bulls would still be in control.

A close below the SMA will also mean the RSI could be trading below 50 and favoring bearish momentum. The next pause for bears may be at 93.06, which was a support level created on July 17. On the upside, 100.85 could be the key resistance to watch.