On Thursday morning (August 15th) in the Asian market, US crude oil fluctuated narrowly and is currently trading at $77.24 per barrel. On Wednesday, it closed down 1% after an unexpected increase in US crude oil inventories and a slight easing of concerns that the escalation of the Middle East conflict could threaten the supply of major oil producing regions around the world.

Brent crude oil futures closed down 93 cents, or 1.15%, on Wednesday at $79.76 per barrel. US crude oil futures closed at $76.98 per barrel on Wednesday, down $1.37 or 1.8%.

According to data from the US Energy Information Administration, US crude oil inventories increased by 1.4 million barrels, while the expected decrease is 2.2 million barrels. This is the first increase in US crude oil inventories after six consecutive weeks of decline.

Robert Yawger, the head of futures at Mizuho Energy, said, "The impressive six week decline is now a thing of the past. The fact that we have ended the continuous decline should put some pressure on prices.

Gasoline and distillate inventories have decreased more than expected.

According to data from the American Petroleum Institute on Tuesday, inventory decreased by 5.21 million barrels last week.

Brent crude oil rose more than 3% on Monday, recording five consecutive days of gains and closing at $82.30 per barrel, after hitting a seven month low of $76.30 at the beginning of last week.

Iran vows to respond harshly to the killing of Hamas leaders at the end of last month. Three senior Iranian officials have stated that Iran will not directly retaliate against Israel for the assassination only if a ceasefire agreement is reached in Gaza.

The ceasefire negotiations between Israel and Hamas will begin in Doha on Thursday and last for several days. Officials from Israel, Qatar, the United States, and Egypt will participate in the Gaza ceasefire negotiations; Hamas will be absent from the Gaza ceasefire negotiations in Doha on the 15th, but may hold talks with relevant mediators later and evaluate Israel's response in the negotiations.

The International Energy Agency lowered its expectations for oil demand growth in 2025 on Tuesday, citing the impact of weak economies in major Asian countries on consumption, which has also hindered the rise in oil prices. Previously, OPEC also lowered its expected demand for 2024 for similar reasons.

A series of disappointing indicators recently have weakened people's expectations for the economic performance of Asian powers in July, exacerbating concerns about the world's second-largest economy.

Analysts also pointed out that due to the slowdown in consumer spending affecting travel budgets, global aviation fuel demand will tend to weaken, and this shift may drag down oil prices in the coming months.

In the first half of this year, due to lower than expected consumption in the two major oil markets of the United States and major Asian countries, global oil demand was difficult to reach the expected level.

Aviation fuel accounts for approximately 7% of global oil demand, and as travel continues to rebound from the pandemic, it is widely expected that aviation fuel will become one of the pillars of growth this year.

According to Goldman Sachs' data, as of July this year, the average global demand for aviation fuel was about 7.49 million barrels per day, an increase of nearly 500000 barrels per day compared to the same period last year.

The demand growth in the coming months needs to be even faster to achieve the bank's forecasted annual growth target of 600000 barrels per day. Given the signs of economic slowdown, this seems unlikely.

In recent days, major airlines and travel companies in the United States have expressed similar concerns that consumer spending is slowing down due to shrinking disposable income, which may drag down leisure tourism.

In the three months ending in June, the average growth rate of US consumer spending was only 0.3%, the slowest growth rate in over a year.

The International Energy Agency (IEA) stated on Tuesday, "We believe that as the economic downturn drags down demand for air travel, there is limited room for further growth in the traditionally macro influenced product category of aviation fuel in the United States

Analysts from Bank of America say that the sluggish economic activity may also exacerbate the slowdown in global trade, thereby reducing demand for air cargo. They pointed out that global trade has been slowing down in the past few years as demand in the United States and Europe shifts from goods to services.

This week, the Organization of the Petroleum Exporting Countries (OPEC) also lowered its global oil demand growth forecast for 2024, marking the first time since the release of this year's oil demand growth forecast in July 2023.

In July, global technical malfunctions caused dozens of flights to be grounded for several days, which also affected the demand for aviation fuel. The IEA stated that this is likely the reason for the year-on-year decrease of approximately 10000 barrels per day in US aviation fuel consumption in July.

In short, the macro conditions for transportation fuel are rapidly deteriorating, "said an analyst from Bank of America." In view of this, we believe that the overall demand trend for aviation fuel remains weak

Some long-term factors, such as changes in consumer behavior and technological improvements, have also had an impact on consumption.

Rystad analyst Wei Ran Gan said that the improved efficiency and range of the new aircraft mean that airlines can transport more passengers and fly longer distances while consuming less fuel.

The average fuel economy of American commercial airlines has increased from 64.9 seat miles per gallon in 2019 to 65.5 seat miles per gallon in 2023. Seat mile is an aviation industry term used to measure an airline's capacity.

Analysts from Bank of America say that after the pandemic, consumer preferences have shifted from international destinations to short haul domestic flights, which has also hurt demand.

Goldman Sachs analysts say that at the same time, the long-standing trade war between China and the United States has reduced air traffic between the two countries to a quarter of what it was five years ago.

They added that since the Russia-Ukraine conflict in 2022, many borders have been closed to Russian tourists, so international travel in Russia has declined by 40% compared with 2019.

Analysts say that if these two routes grow like other global air travel, the demand for aviation fuel will be about 80000 barrels per day higher.

They expect aviation fuel demand to continue to grow, but warn that these issues and the slowdown in demand caused by mileage improvements pose risks to their oil demand and price forecasts for this year.

This trading day will see the July retail sales monthly rate in the United States, commonly known as the "terrifying data", which investors need to pay close attention to. The market expects a month on month growth of 0.3%, which is slightly biased towards suppressing gold prices. In addition, investors should also pay attention to the performance of the changes in the number of US initial jobless claims, the annual rate of the US import price index in July, the US Federal Reserve manufacturing index in August, and the US monthly rate of industrial output in July.

From a technical perspective, at the daily level, US crude oil has been under continuous pressure after the 100 day moving average was blocked, and has now fallen below the 200 day moving average of 77.95. The short-term downside risk has increased, and short-term attention should be paid to support around the 10 day moving average of 76.23. The 200 day moving average has now transformed into initial resistance, and if it can rise above this level, it will weaken the short-term bearish signal.

Daily chart of major US crude oil contracts