gasoline inventories tighten ahead of Memorial Day weekend

Crude oil price has edged higher in Wednesday’s session after industry data showed that US gasoline inventories were at the lowest recorded level during this time of the year since 2013. As at the time of writing, Brent futures were at $114.69; up by 0.91%. The benchmark for US oil – WTI futures – is also up by 0.82% at $111.17.

Tight gasoline supplies

Data released by the American Petroleum Institute late on Tuesday showed that crude oil inventories rose by 567,000 barrels for the week ending on 20^th May. In the previous week, it had declined by 2.445 million barrels.

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At the same time, sources familiar with the released numbers have indicated that gasoline inventories dropped by 4.22 million barrels in the past week. At their current level, the stockpiles are at the lowest they been during this time of year since 2013.

The tight oil supplies in the US, which the leading consumer of the commodity worldwide, comes ahead of the country’s driving season. The US Memorial Day, which is set for the coming weekend, will mark the beginning of the country’s summer season. Indeed, it will likely be the busiest since the pre-pandemic period.

Investors now await the confirmation of the stipulated trend through the EIA’s inventory data scheduled for release in the afternoon. Analysts expect gasoline stockpiles to have dropped by 634,000 compared to the prior week’s draw of 4.779 million barrels.

Brent oil technical analysis

Crude oil price has been subject to heightened volatility since late February after Russia invaded Ukraine. During that timeframe, the resurgence of COVID-19 in China has also impacted the oil market. Even with these opposing forces, the psychological level of 100 has remained a steady support zone for about three months now.

In the short term, I expect Brent oil price to remain above this level amid an improved demand outlook. In particular, the support level at 110.09, which is along the 25-day EMA, will be worth watching in the near term. On the upside, it will likely continue to find resistance at 115.75 as the bulls gather enough momentum to retest the two-month high of 118.86. However, this bullish outlook will be invalidated by a pullback past 110.