International oil prices are entering the U.S. driving and hurricane season, but the upward momentum is expected to be limited. This is due to concerns about an economic slowdown caused by tariffs, as well as the possibility of additional supply increases by oil-producing countries. In the second half of the year, the price of West Texas Intermediate (WTI) crude oil is expected to show a gradual decline, ranging from $55 to $70 per barrel.
On May 28, Choi Yechan, a researcher at SangSangIn Securities, stated in a report titled "Driving & Hurricane Season: Can It Revive Oil Prices?" that "seasonal factors are unlikely to be sufficient to reverse the structural downward trend in oil prices."
Choi first explained, "The driving season and hurricane season have traditionally acted as factors pushing up oil prices by simultaneously causing increased demand and supply instability in the international crude oil market." He added, "This year as well, there is clearly a possibility of a short-term rebound in oil prices."
Every year, from late May to September, the United States?the world's largest oil consumer?enters the driving season, when holidays lead to a surge in road trips and outdoor activities, resulting in peak consumption of petroleum products. Additionally, June to November marks the hurricane season. In particular, the period from August to November is considered a time when powerful hurricanes are highly likely to strike the southern Gulf of Mexico coast, where a significant portion of total U.S. oil production and major refining facilities are concentrated.
However, this year, travel demand during the U.S. driving season is not expected to be as strong as in previous years, and hurricanes are also likely to cause only short-term supply disruptions. Specifically, Choi identified several factors that are expected to limit the upper range of oil prices: concerns about economic slowdown due to tariffs; the possibility of additional supply increases by OPEC+; limited growth in travel demand due to a cooling labor market; and forecasts of less active hurricane activity compared to 2024.
He explained, "Given the current situation, where concerns about a U.S. economic slowdown due to tariffs and the possibility of increased supply from OPEC+ are capping oil prices, it is difficult for the driving season to provide significant support for prices. Vehicle travel by Americans during the holiday season is closely related to the domestic labor market. With the post-pandemic overheated labor market now cooling, it is difficult to expect a significant increase in travel demand."
Choi also mentioned that the U.S. National Oceanic and Atmospheric Administration (NOAA) has indicated a 60% probability that Atlantic hurricane activity this year will be stronger than average. He noted, "While there remains a possibility of a short-term rebound in oil prices if a strong hurricane occurs, forecasts are less severe than in 2024." He added, "This means that concerns about supply disruptions sufficient to push oil prices above $70 are limited."
Choi concluded, "In summary, while seasonal factors may lead to short-term supply-demand disruptions and a resulting rebound in oil prices, they are not enough to reverse the downward trend. We maintain our outlook for a gradual decline in WTI prices in the range of $55 to $70 per barrel in the second half of the year."
Meanwhile, on May 27 (local time), July delivery WTI crude oil on the New York Mercantile Exchange closed at $60.89 per barrel, down 1.04% from the previous trading day on May 23. This is interpreted as a result of weakened investor sentiment due to concerns that OPEC+ may decide to increase production at this week's meeting.
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