Crude Oil Market Analysis: Supply Pressure Holds Downside Bias Despite Summer Demand

The global crude oil market remains under considerable pressure, despite entering the high-demand summer season. Over the past two weeks, ICE Brent and NYMEX WTI futures have shown slight rebounds from multi-month lows but remain broadly subdued. Persistent bearish drivers include record US crude inventories, sluggish demand signals from China and India, and a lack of new OPEC+ supply cuts. Although the physical market is adequately supplied, traders remain cautious, reflecting a market caught between stable underlying supply and only tentative evidence of demand recovery.

Recent EIA data reports crude inventories at ten-month highs, while global muscle remains limited with Russian exports staying robust and OPEC+ members showing little appetite for fresh voluntary cuts. On the demand side, US gasoline consumption, a bellwether for summer, is only modestly improving, and Asian refineries appear to be operating below their full run rates. Speculative positioning has consequently shifted more defensively, with most managed funds reducing long bets and defensive strategies gaining favour. The weather outlook is typical for this time of year: hot and dry in the Middle East, abnormally warm in the US Gulf, but no immediate threats from hurricanes, meaning no bullish weather catalyst in sight.

📈 Prices: Latest Crude Oil Futures & Sentiment

Contract	ICE Brent (USD/bl)	Weekly Change	NYMEX WTI (USD/bl)	Weekly Change	Market Sentiment
Aug 25	67.04	+1.46%	65.37	+1.26%	Mildly Bullish
Sep 25	66.35	+1.30%	63.29	+1.02%	Cautiously Bullish
Oct 25	65.71	+1.30%	62.51	+1.00%	Neutral
Nov 25	65.28	+1.20%	62.03	+0.71%	Neutral
Dec 25	65.06	+1.16%	61.71	+0.62%	Neutral

🌍 Supply & Demand Drivers

• OPEC+ Production Policy: Uncertainty surrounds H2 2025 quotas; recent meetings have not announced deeper cuts despite quotas circumvention and Russian overproduction.
• US Crude Inventories: EIA reported stocks rising to 10-month highs, pressuring prices despite a seasonal demand uptick.
• Asian Demand: China and India show tepid growth; refinery throughput is stable but unspectacular.
• Speculative Positioning: Large funds have notably reduced net-long positions; hedge funds even briefly net-short both Brent and WTI.
• Geopolitical Premium: Tensions in the Middle East have eased, lowering supply risk premiums. Red Sea disruptions persist but their effect is now priced in.

📊 Fundamentals & Global Stock Comparison

Country	Production (mln bbl/d)	Stock Level	Exports (mln bbl/d)
USA	13.2	~470 mln (10-mo high)	3.5
Saudi Arabia	9.0	~165 mln	7.4
Russia	10.8	~100 mln	5.3
UAE	4.0	~45 mln	2.7
China	4.2	N/A	N/A

⛅ Weather Outlook for Major Oil Regions

• US Gulf Coast: Continuing hot and dry, hurricane formation risk remains low for now. Supports refinery operation, but no weather-driven supply threat in the short term.
• Middle East: Typical summer heat and drought persist, maintaining power demand but not disrupting supply or transit routes.
• Russia/Baltic: No adverse weather affecting pipeline or port export flows. The weather is normal for the season.

📌 Key Insights & Trading Recommendations

• Short-term price trend is moderately bullish due to risk premium stabilisation and physical tightness in some contracts.
• Expect further resistance above $67–68 Brent and $65 WTI; upside capped unless inventory draw or supply shock emerges.
• Physical buyers: Cover part of forward demand, but avoid aggressive spot purchases on rallies.
• Hedgers: Continue layering in puts/put spreads; avoid excessive long gamma exposure.
• Spec buyers: Watch for rallies toward $67.50 Brent or $65.50 WTI to reduce exposure; trailing stops advisable.
• Main risk: Unexpected OPEC+ cut or hurricane in the Gulf could prompt a sharp short-covering rally.

📆 3-Day Regional Price Forecast

Exchange	Contract	Forecast Price (USD/bl)	Trend
ICE	Brent Aug 25	66.8 – 67.5	Slightly Up/Range-bound
NYMEX	WTI Jul 25	65.1 – 65.7	Slightly Up/Neutral

Watch factors: EIA and OPEC+ headlines, speculative re-positioning, and Gulf weather updates. Volatility remains elevated – range trading strategies favoured for now.