Supply-side disruptions and promising fundamentals appear to be unable to shake the recession fears that continue to weigh oil prices down. While several banks and analysts believe oil prices are set to climb later this year, economic uncertainty continues to be the main factor for oil markets this week, OilPrice said.

Whilst diesel consumption is usually the first to decline in recessionary times and we have already seen the first signs of that, gasoline demand has so far been robust in 2023. US gasoline demand has trended some 100,000 b/d above year-ago levels and is expected to average 9.1 million b/d over the summer, though still 6% lower than the pre-pandemic norm. 

Yet just as gasoline cracks started decreasing in April, implied demand figures issued by the EIA saw a whopping 900,000 b/d decline last week, raising fears that summer demand will not be as bright as previously thought. Some demand upside might come from lower prices if refinery overcapacity does indeed materialize, with 2 million b/d of new downstream capacity hitting the markets this year.