The oil market got here beneath additional stress yesterday, settling beneath US$66/bbl for the primary time since early June. Sentiment was bearish following releases from the Worldwide Vitality Company (IEA) and Vitality Data Administration (EIA). But on the similar time, hopes are excessive that Friday’s assembly between Presidents Putin and Trump would possibly take away a lot of the sanction danger hanging over the market, ING’s commodity skilled Warren Patterson notes.
IEA numbers paint a bearish image
“This may be a bit untimely, with Trump threatening extreme penalties if Putin fails to conform to a ceasefire. Clearly, there’s upside danger for the market if little progress is made. This might have Trump extending secondary tariffs on different patrons of Russian power. The anticipated oil surplus by means of the latter a part of this 12 months and 2026, mixed with OPEC spare capability, implies that the market ought to be capable to handle the impression of secondary tariffs on India. However issues change into tougher if we see secondary tariffs on different key patrons of Russian crude oil, together with China and Turkey.”
“The IEA month-to-month oil market report was largely bearish, with the company anticipating giant stock builds in direction of the top of this 12 months and thru 2026. The IEA forecasts that international oil demand will develop by 680k b/d this 12 months and 700k b/d in 2026. International oil provide is forecast to develop by 2.5m b/d in 2025 and 1.9m b/d in 2026. Provide expectations had been revised greater due to the unwinding of cuts seen from OPEC+. The IEA numbers paint a bearish image, however the company additionally highlighted potential dangers round Russian and Iranian provide as a consequence of the opportunity of extra sanctions.”
“The weekly EIA stock report was additionally reasonably bearish, with US crude oil inventories growing by 3.04m barrels during the last week, greater than the 1.5m barrel construct the American Petroleum Institute (API) reported the day prior to this. The rise was pushed by stronger imports, which grew by 958k b/d week on week. For refined merchandise, gasoline shares fell by 792k barrels, as anticipated, by means of the summer season months. Whole gasoline inventories stay roughly in keeping with the 5-year common. There was additionally some additional aid for distillate shares, which elevated by 714k barrels. Whereas distillate inventories have elevated by 11m barrels since early July, shares are nonetheless pretty tight. This could proceed to supply relative assist to center distillates.”
