How Will Rising Crude Oil Prices Affect Demand and Gasoline? / Commodities / Crude Oil
What are the new fundamentals for crude oil to look at this week?Could Asian demand be slowed down by Saudi Arabia raising its prices?
Crude oil prices soared earlier this weekafter Saudi Arabia said on Sunday it would raise crude oil prices for mostregions except the United States. Just days after opening the floodgates alittle wider (as announced lastweek following an OPEC+ meeting), Saudi Arabia wasted no time inraising its official selling price for Asia, its main market. It is worthnoting that the country is one of the few OPEC members that has spare oilcapacity. Thus, this decision to raise prices happens just when demand,especially in Asia, is increasing.
In the prediction contest, Goldman Sachsraised its forecast for the price of a barrel of Brent to $135 by the end ofthe year.
Looking at the impact of oil prices ongasoline, we are also starting to see changes in consumer behavior. As we headinto the summer, people are likely going to think twice before making longtrips by car during their vacation.
As a result, the “crack spread” isclearly narrowing, as you can see in the third following chart.
WTI Crude Oil (CLN22) Futures (Julycontract, daily chart)
RBOB Gasoline (RBN22) Futures (Julycontract, daily chart)
42 x RBOB Gasoline (RBN22) - WTI Crude Oil(CLN22) “Crack Spread” Futures (July contracts, daily chart)
Question: Is RBOB gasoline taking the lead now to pull crude oil prices backlower with it, or will the RB-CL spread find a rebounding floor around the $50price mark, acting as support?
Writeback and let me know.
That’sall for today, folks. Happy trading!
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
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