The latest EIA report delivers a surprisingly bearish signal for crude, even as geopolitical tensions remain high.
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Unexpected Crude Build (+5,451K): This is the second consecutive large build, which is difficult to reconcile with the massive disruptions in the Middle East.
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Shrinking Product Stocks: Despite the crude surplus, gasoline (-2,593K) and distillates (-1,032K) continue to draw down faster than expected. This indicates that while raw supply is increasing in the U.S., refined products are still in high demand.
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Geopolitical Pivot: The price drop is largely driven by speculation that Trump may announce a de-escalation or a shift in policy regarding Iran tonight.
The market is at a crossroads. The physical data shows a growing U.S. crude surplus, yet eyes remain fixed on the war. If the "geopolitical premium" evaporates due to diplomatic shifts, the current surplus could accelerate the price correction toward the $75–$80 target suggested by the term structure.
The price of crude oil is not responding heavily on the data from the EIA report, although it halted declines from the previous severals minutes. The price is slightly below 100 USD per barrel and investors await the Trump speach in the evening US time which may spur another big moves on the price.
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