Seasonally speaking, crude oil tends to make significant price gains in the summer, as vacationers and the annual trek of students returning to college in August creates increased demand for unleaded gasoline.
The market can also price in a premium for supply disruptions due to threats of hurricanes in the Gulf of Mexico. However, towards mid-September, we often see a seasonal tendency for prices to peak out, as the driving and hurricane seasons begin to wind down. Crude oil’s (NYSEARCA:USO) seasonal decline is highlighted in yellow in the above chart.
Last year crude peaked nearly right on cue, in late-September/early-October just shy of $75 per barrel. When the decline ended in December, crude traded under $45 per barrel. From late-December until late April crude recovered to trade over $65 per barrel. The trend since then has been lower and that trend looks poised to continue and potentially accelerate. A persistently firm U.S. dollar is likely to limit upside while ongoing trade troubles and slowing growth are likely to dampen demand.