Gasoline prices today (May 18): Mixed

World oil prices

Reuters reported that at the end of the trading session on May 17, oil prices increased by about 2 USD as optimism about oil demand and negotiations on the US debt ceiling overshadowed concerns about supply.

Brent crude for July delivery rose $2.05, or 2.7%, to $76.96 a barrel. U.S. West Texas Intermediate crude rose $1.97, or 2.8%, to $72.83 a barrel. Jim Ritterbusch, president of Ritterbusch and Associates in Galina, Illinois, said the strong oil trading on May 17 was due to expectations of a debt ceiling deal later this week. That expectation appears to have lifted the negative weight on most asset classes, including oil.

According to Reuters, on May 17, US President Joe Biden and Republican Senator Kevin McCarthy emphasized their determination to reach an agreement soon to raise the $31.4 trillion debt ceiling and avoid a catastrophic default. The agreement is expected to be reached soon and approved by both houses before the federal government runs out of money to pay its bills after June 1.

Optimism about the debt ceiling deal overshadowed a report from the US Energy Information Administration (EIA) on a rise in US crude oil inventories in the week ended May 12. According to the EIA, US crude oil inventories rose by 5 million barrels, contrary to and far exceeding the 900,000 barrel decrease forecast by many analysts consulted by Reuters.

Rising crude inventories added to concerns about US growth after data showed US retail sales rose 0.4% in April, missing estimates for a 0.8% increase.

In contrast to the rise in oil reserves, US gasoline reserves fell by 1.4 million barrels. The International Energy Agency (IEA) on May 16 predicted that oil demand will exceed supply by 2 million barrels per day in the second half of this year. China will account for 60% of oil demand growth in 2023. In China, lower-than-expected growth in industrial output and retail sales in April suggested that the East Asian country's economy lost momentum early in the second quarter.

Industrial output rose 5.6% in April from a year earlier, up from a 3.9% gain in March, data from the National Bureau of Statistics (NBS) showed. However, the increase was still much lower than the 10.9% increase expected in a Reuters poll of analysts, but still marked the fastest growth rate since September 2022. Retail sales, a gauge of consumption, rose 18.4%, the fastest since March 2021. In March, the increase was 10.6%. However, the increase in April was still lower than analysts' forecasts of a 21% increase.

Despite the weak economic data from China, Vandana Hari, founder of oil market analytics provider Vanda Insights, said markets are in “wait and see mode” on the outcome of debt ceiling negotiations.