Latest data from the Energy Information Administration (EIA) indicates a massive surge in crude inventories, far exceeding market forecasts:
-
Crude Oil Inventories: +15.99m bbl (Expected: +1.2m bbl)
-
Gasoline Inventories: -1.01m bbl (Expected: -0.6m bbl)
-
Distillate Inventories: +0.25m bbl (Expected: -1.9m bbl)
-
Cushing Inventories: +0.88m bbl
-
Refinery Utilization: fell by 2.4 percentage points (Expected: +0.5 percentage points)
-
US Crude Production: steady at approximately 13.5m bpd (-33k bpd)
While inventories are returning to levels seen last year, they remain significantly below the 5-year average. Nevertheless, current trends are beginning to confirm that the market is indeed facing a substantial oversupply.
Crude inventories are rebounding sharply in line with seasonality. Source: Bloomberg Finance LP, XTB
Market Commentary: Iran Tensions vs. the Specter of Global Oversupply
The oil market is currently suspended between a geopolitical risk premium and hard data pointing to oversupply. It is estimated that the geopolitical premium currently accounts for between $3 and $10 per barrel.
On one hand, Donald Trump’s rhetoric toward Iran has sharpened. The President accused Tehran of resuming "sinister" nuclear ambitions, fueling fears of a blockade of the Strait of Hormuz—through which 20% of the world’s oil flows—and a potential price spike above $100. Markets are anxiously awaiting Thursday's talks, while US forces in the region remain on high alert. Notably, however, during his State of the Union address, Trump indicated a preference for reaching a deal with Iran, while maintaining that he would not allow the country to pursue nuclear weapons.
On the other hand, physical market fundamentals continue to weaken. Today’s EIA report, showing a build of nearly 16 million barrels, is a "bearish" signal confirming global oversupply. Russia and Iran are already aggressively slashing prices (offering China discounts of $11–$12 per barrel) to offload excess crude. Furthermore, the fading "Net Zero" narrative in global leadership communications is giving way to policies focused on increasing production. In the medium term, this may keep WTI prices in check (currently around $66), provided that an open military conflict does not erupt.
US OPEN: Wall Street holds its breath ahead of Nvidia earnings
Chart of the day: US100 gains ahead of the Nvidia earnings 📈
Daily summary: Technology Drives Wall Street as Tehran Seeks Truce
US OPEN: Wall Street rebounds after AMD-Meta deal
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
