Crude Oil Three Rallies Before the Fall

Each year, the U.S. gasoline market goes through an important seasonal transition. The Environmental Protection Agency (EPA) generally requires lower-volatility gasoline during the summer ozone season, beginning May 1 for refiners and terminals and June 1 for retailers, and generally ending September 15. Lower Reid Vapor Pressure (RVP) gasoline reduces evaporative emissions during hot weather but can be more costly to produce. When these restrictions end, refiners transition toward winter-grade gasoline. At the same time, the peak summer driving season is ending, reducing seasonal gasoline demand and some of the demand for crude oil used by refiners.

These changes help create seasonal headwinds for crude oil during the fourth quarter. Summer vacations end, children return to school, and highway travel typically retreats from its summer peak. Another interesting influence appears late in the year. December 31 is an important property-tax assessment date for crude oil inventories in many Gulf Coast jurisdictions, giving refiners and other crude oil holders an incentive to reduce year-end stocks. U.S. Energy Information Administration (EIA) data show this pattern remains remarkably persistent: from 2012 through 2025, Gulf Coast commercial crude inventories declined from November to December in 13 of 14 years, averaging about 8.9 million barrels.

This year, however, seasonality must share the stage with geopolitical risk in the Middle East. The region remains critical to global petroleum supplies, and unexpected military escalation, production disruption, or interference with major shipping routes could quickly alter the supply-and-demand outlook. That does not eliminate the historical fourth-quarter tendency toward weaker crude oil prices, but it reminds traders that seasonality is a tendency—not a guarantee. The seasonal setup may favor the short side. However, traders still need a defined risk-management plan that can protect them when an unexpected geopolitical event produces a sharp counter-seasonal rally.