Dipping Oil Prices fueled by a robust US dollar and diminishing enthusiasm toward a trade agreement
Headline: Mixed Trends for Crude Oil and Gasoline Futures Amid Supply, Demand, and Geopolitical Factors
In the recent days of July 2025, the trends for September WTI crude oil (CLU25) and September RBOB gasoline (RBU25) futures have shown fluctuating movements.
Crude Oil Trends
CLU25 has experienced both gains and declines, with instances such as:
- On July 24, CLU25 closed up +1.20% (+0.78), while RBU25 closed down -0.61% (-0.0127).
- On July 23, CLU25 was down by 0.51%, whereas RBU25 was up by 0.54%.
- On July 24 again, CLU25 was slightly down by 0.09%, but RBU25 rose +0.90%.
- On July 26, CLU25 declined by 1.32%, with RBU25 also dropping.
Factors Affecting Crude Oil Prices
- Supply and Inventories:
- The Energy Information Administration (EIA) reported a third consecutive weekly build in crude oil supplies at Cushing, Oklahoma, putting downward pressure on crude oil prices.
- Conversely, gasoline inventories had a larger-than-expected draw, supporting RBOB gasoline price increases even when crude prices declined.
- Currency Movements:
- The strength of the U.S. dollar has exerted downward pressure on energy prices as a stronger dollar makes crude more expensive for holders of other currencies.
- A recent decline in the dollar index to a two-week low provided some support to energy prices.
- Trade and Geopolitical Developments:
- A new trade agreement between the U.S. and Japan is easing trade concerns, potentially supporting energy demand growth.
- Iraq plans to resume crude exports from its northern Kurdish region through the Iraq-Turkey pipeline, adding about 230,000 barrels per day to the market after a hiatus since March 2023. This supply increase challenges crude prices.
- Economic Indicators:
- Some U.S. economic data have been weaker, such as a 2.7% decline month-over-month in existing home sales reaching a nine-month low, which may dampen energy demand expectations.
Gasoline Trends
RBU25 has shown more consistent gains, influenced by inventory draws, even when crude prices fall, reflecting gasoline’s distinct supply-demand dynamics.
Market Outlook
The crude oil future (CLU25) is experiencing volatility due to opposing forces: increasing supplies at Cushing and Iraqi crude exports weigh on prices, while trade optimism and dollar weakness occasionally support prices. The gasoline future (RBU25) is more influenced by inventory draws.
Overall, the market reflects a balance between supply increases (U.S. inventory builds and Iraqi exports) and improving demand signals from trade progress and currency moves, leading to mixed price trends for CLU25 and RBU25 futures as of late July 2025.
Note: The situation remains fluid, so continuous monitoring of inventory reports, currency trends, geopolitical developments, and economic data is essential for a more precise price outlook.
- US crude oil production in the week ending July 18 fell -0.8% w/w to 13.273 million bpd.
- Kurdistan expects to supply Iraq's crude market with 230,000 bpd of crude once exports resume.
- Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022.
- OPEC+ is discussing a pause in further production increases from October, following its next monthly hike in September.
- US Jun capital goods new orders nondefense ex-aircraft & parts unexpectedly fell -0.7% m/m.
- As of the date of publication, Rich Asplund did not have positions in any of the securities mentioned in this article.
- Despite the volatility in the crude oil market influenced by factors such as supply and inventories, currency movements, trade and geopolitical developments, and economic indicators, the finance industry is closely observing the ongoing trends of September WTI crude oil (CLU25) futures, given its significant impact on the overall energy sector.
- Meanwhile, the energy industry is keeping a close eye on the more consistent gains in September RBOB gasoline (RBU25) futures, as the distinct supply-demand dynamics of gasoline may present various opportunities in the wider business landscape.
