Oil buckles under the weight of its own shadow
|WTI’s trading tape looks like a tired heavyweight leaning on the ropes, unable to muster a counterpunch. Eleven weeks of grind, and now the market’s staring at the canvas after a one-two combo: a surprise U.S. crude build and a pop in production just as the demand narrative takes another body blow. The IEA has once again shaved its 2025 demand-growth forecast—now just 700k barrels per day, down not only from last month but well off the year’s starting gun. The culprit? A softer-than-hoped-for appetite from developing economies that were supposed to be the growth engine. Instead, the barrels are stacking up like unsold inventory in a dusty warehouse.
Even the geopolitics aren’t throwing a bid under crude. Sure, sanctions on Russia and Iran sound bullish on paper. Still, the offsets are gushing in from every angle—OPEC+ has been opening the taps, U.S. output keeps ticking higher despite a sagging rig count, and drilling tech has turned every shale basin into a faster pump. The result? A supply pool swelling like a flash flood with nowhere to drain.
The EIA’s latest Short-Term Energy Outlook just torpedoed Brent’s Q4 forecast to $58 from $71, underscoring that the supply/demand ledger is badly lopsided—2 million bpd of extra supply in the back half of 2025 versus just 1.6 million bpd of fresh demand. That delta doesn’t scream “tight market”; it screams “make room in the tanks.”
API’s Tuesday sneak peek set the tone—crude stocks up +1.52 million versus a draw expected—and DOE confirmed it with an even bigger +3.036 million build. Cushing rose for a sixth straight week. Gasoline draws and distillate builds muddied the product picture, but the headline was clear: more oil in the system than the physical market needs right now. Prices slumped on impact and have been loitering near the lows ever since, the summer’s thin liquidity making each downtick feel heavier.
Traders are now eyeing the looming Trump–Putin Alaska sit-down for any hint of sanctions relief on Russia, but for now, the oil tape’s reading like a cautionary tale: too much supply, not enough conviction, and a market drifting toward the next psychological floor. In a business where barrels talk and sentiment walks, WTI is mumbling at best—no swagger, no squeeze, just a slow leak toward wherever gravity takes it.
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