Oil rally reverses amid signs of slowing gasoline demand

Oil shed its gains after a bullish crude inventory report was tempered by an unseasonal slowdown in gasoline demand.

West Texas Intermediate slipped under US$110 a barrel after rising as high as US$114.05 a barrel during the session. A government report showed that US crude stocks fell as fuelmakers increased runs amid historically high refining margins. Meanwhile, gasoline demand on a four-week rolling average fell to the lowest seasonal level since 2014, with the exception of 2020.

The slowdown in gasoline demand growth could be a sign that prices are starting to impact consumers, said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. However, the outlook for oil is still strong, she added. “Demand is currently below seasonal averages but the key thing for crude is that it is still growing.”