The crude oil market is entering a period of renewed bullishness as both NYMEX WTI and ICE Brent futures are posting steady gains across the forward curve. Over the last week, WTI and Brent have seen advances of 0.3–1.1% across key contracts, buoyed by signs of tightening supply and promising demand recovery in major consumption regions. A confluence of OPEC+ output discipline, strong physical crude demand from Asia, and emerging weather-related disruptions underpin this price momentum. While energy markets have recently been challenged by concerns over global economic growth and demand, current data shows resilient US gasoline and diesel consumption, persistent drawdowns in US commercial stocks, and rising refinery runs in both North America and Asia.
Looking ahead, weather forecasts are adding further intrigue. The Atlantic hurricane season is predicted to be above average, with increased risk for Gulf Coast disruptions at a time when strategic reserves are lower than a year ago. Combined with geopolitical flashpoints — spanning the Middle East to Russia/Ukraine — risk premiums are creeping back into crude pricing. While speculative positioning remains modest, the bias among managed money and physical players is shifting to the long side as fears of an imminent global surplus subside.
📈 Prices
| Contract | Last Close (USD/bl) | Change | Change (%) | Sentiment |
|---|---|---|---|---|
| NYMEX WTI Jan 26 | 58.46 | +0.21 | +0.36% | Bullish |
| NYMEX WTI Feb 26 | 58.30 | +0.22 | +0.38% | Bullish |
| ICE Brent Feb 26 | 62.66 | +0.72 | +1.15% | Bullish |
| ICE Brent Mar 26 | 62.34 | +0.69 | +1.11% | Bullish |
| ICE Diesel Dec 25 | 661.00 (USD/t) | +12.50 | +1.89% | Bullish |
🌍 Supply & Demand
- OPEC+ cuts remain in sharp focus, with members largely adhering to voluntary reductions, underpinning a tighter global crude balance.
- US output is plateauing due to rig count reductions and capital discipline, curbing fears of shale-driven oversupply.
- Asian demand is rebounding, notably from Chinese and Indian refiners, as industrial activity steadies and stockpiling resumes.
- US commercial crude inventories experienced another draw, and global floating storage has ticked down, signaling healthy physical demand.
- Geopolitical risks (Middle East, Russia sanctions) are keeping a risk premium in the barrel.
📊 Fundamentals
- US Stocks: Commercial crude inventories fell by 2.2 million barrels last week, while gasoline and distillates stocks remain below the five-year average.
- Refinery Margins: Remain robust amid strong demand for gasoline/distillate, supporting higher runs and crude uptake.
- Speculative Positioning: Managed money has shifted to a net-long stance in both WTI and Brent, reflecting renewed bullish sentiment.
- Forward Curve: Both WTI and Brent curves are in shallow backwardation (nearby contracts above deferred), indicating demand firmness.
- Comparison to Last Report: Price recovery has accelerated compared to last week’s consolidation phase, mainly due to a more constructive physical market and tightening stocks.
🌦️ Weather Outlook
- US Gulf Coast: Elevated Atlantic hurricane season risk could pose disruptions to offshore oil production and refining assets through coming months.
- Middle East: Normal summer conditions, but risk of extreme heat events may affect infrastructure and logistics.
- Russia & North Sea: Cooler, wetter conditions may impede some mining activity and transportation but are not forecast to cause major production issues short-term.
- Asia: Monsoon forecasts are normal to slightly above average, supporting continued high refinery and industrial usage.
🌎 Production & Inventories (Key Countries)
| Country | Production (mb/d) | Change YoY | Strategic Stocks |
|---|---|---|---|
| USA | 13.0 | +0.1 | Depleted; replenishment underway |
| Saudi Arabia | 9.0 | -1.0 | Stable |
| Russia | 9.4 | -0.2 | Adequate, constrained exports |
| China | 5.1 | +0.2 | Commercial restocking |
| India | 5.0 | +0.1 | Strong imports, full tanks |
📆 Trading Outlook & Recommendations
- Bulls: Maintain or add to long positions in both WTI and Brent amid strong technical and fundamental support; target near resistance levels of $60 for WTI and $65 for Brent in the near term.
- Bears: Watch for exhaustion near major resistance, potential for profit-taking if macro headwinds (recession risk, Fed policy) surprise on the downside.
- Commercials: Lock in supply via forward contracts to hedge against further upside risk from weather interruptions and geopolitics.
- Speculators: Favor long-biased spread structures (WTI/Brent, prompt/deferred) while monitoring shifts in OPEC+ rhetoric and speculative crowding.
- Volatility traders: Prepare for increased volatility events around weather and geopolitical headlines.
🔮 3-Day Regional Price Forecast
| Exchange | Product | Price Forecast (USD/unit) |
|---|---|---|
| NYMEX | WTI Crude Oil | 58.60 – 59.10 / bl |
| ICE | Brent Crude Oil | 62.80 – 63.30 / bl |
| ICE | Diesel (Gas Oil LS) | 660 – 670 / t |
