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The energy sector (NYSEARCA:XLE) gained 3.7% this week for its biggest weekly gain since the end of May, even with crude oil prices finishing flat after back-to-back weekly declines, as a summertime rise in U.S. gasoline inventories reflected weakening energy demand.
It's a surprising sign of softer demand in the middle of the U.S. summer driving season, suggesting high prices at the pump are starting to cause demand destruction among consumers.
The slide in RBOB gasoline, and concerns around gasoline demand destruction, also adds to pressure on crude oil, because "if refiners don't need to make gasoline, then they don't need feedstock crude oil to make gasoline," Mizuho Securities' Robert Yawger said.
But despite troubling signs for crude demand, "the oil market remains very tight and is not allowing WTI crude to break below the mid-US$90s," according to Oanda's Ed Moya.
Front-month Nymex crude (CL1:COM) for September delivery ended the week +0.1% to $94.70/bbl, its lowest settlement value since April 11, while September Brent crude (CO1:COM) closed +2% for the week at $103.20/bbl.
Meanwhile, Henry Hub natural gas futures (NG1:COM) soared 18.3% for the week to $8.299/MMBtu, as some of the hottest weather on record in the U.S. and Europe helped demand.
Top 10 gainers in energy and natural resources during the past 5 days: (BATL) +30.3%, (SBOW) +27%, (SLI) +24%, (SMR) +23.1%, (PBT) +22.5%, (NRT) +19.7%, (WFG) +19%, (EOSE) +18.8%, (IREN) +16%, (TELL) +15.7%.
Top 3 decliners in energy and natural resources during the past 5 days: (NRGV) -17.4%, (MTR) -9.9%, (BKR) -9.7%.
Source: Barchart.com