Fragile Demand for Gasoline, Keeps Pressure on Crude Oil Prices

Crude oil bears increased their selling pressures as oil traders reacted to Saudi’s massive price cuts for supply to Asia.

The Saudis made their biggest discounts on their crude grades in four months as hopes on energy demand recovery got squeezed over the surge in COVID-19 caseloads.

It’s been a double bazooka hit for crude oil bulls as the combination of seasonality and fragile demand for gasoline lately, contributed to the recent bearish trend as the price of WTI broke its critical price support level around $40. In addition oil traders have been on the sidelines in recent weeks, contributing to low volatility witnessed in the energy market.

Oil traders are also concerned about the macro coming from the second-largest economy, revealing crude imports plunged by 5.4% in August to 10.9 million barrels per day, down from a record high recorded in July.

As WTI broke the $40/ barrel psychological support level, traders seem to see an increase in selling pressures triggering stops losses and putting a lid on any bullish catalyst that could trigger a reversal in the near term.

That said, today’s trading session is expected to experience low volatility, as the world’s largest financial markets remain close on the Labor day holiday observed in the U.S. Not forgetting concerns that COVID-19 caseloads could exponential rise as schools and educational centers resume, as squeezed the remaining gas out of the bulls, in rallying prices above the $42.50/barrel critical resistant level in the case of WTI.

However, the recent impressive U.S jobs data suggest that things could get better in the long term coupled with hopes for more stimulus packages expected from the U.S Congress and that could turn the table on the bears momentarily.