The past week in the crude oil market saw robust upward momentum for both ICE Brent and NYMEX WTI futures, reflecting shifting fundamentals and heightened investor optimism. Prices for both benchmarks climbed by over 1% across most near-term contracts, as the market responded to strengthened global demand prospects, ongoing OPEC+ supply constraints, and tense geopolitics. Demand signals out of Asia, particularly China and India, added buoyancy, while US crude inventories showed a sharper-than-anticipated draw, supporting the bullish sentiment. In parallel, factors such as seasonal refinery maintenance in key geographies and reduced North Sea output exerted a tightening effect on physical supply, feeding into paper market gains. Weather risk, particularly the onset of hurricane season in the Gulf of Mexico, also played a role by introducing potential uncertainty around regional supply.

For traders and industry stakeholders, the rally is a signal to closely watch the supply-demand balance and macroeconomic cues. With speculative long positions increasing, the risk of profit-taking-induced corrections rises, but fundamentals currently tip local sentiment to the bullish side. Below, we dissect the evolving landscape through key price data, fundamental drivers, and the forecast horizon.

📈 Price Trends & Market Sentiment

🌍 Supply & Demand Drivers

• OPEC+ Production Policy: Ongoing output discipline is holding a floor under prices, with recent meeting outcomes showing no short-term plans for easing quotas.
• US Crude Inventories: According to the latest EIA report, domestic stocks fell more than anticipated, a sign that demand outpaces current supply in the US market.
• Asian Demand: Refineries in India and China have ramped up throughput in response to post-COVID recovery and summer driving season, increasing spot market competition for cargoes.
• Speculative Activity: Managed money net-long positions have expanded, reinforcing up-trend momentum and signalling market confidence near-term.
• Geopolitical Tensions: Persistent instability in the Middle East, and more recently, disruptions in key transit routes such as the Red Sea, have traders pricing in risk premiums.

📊 Market Fundamentals

• Global Production:
  • OPEC: Maintaining strict compliance with quotas. May output slightly below target due to unplanned outages.
  • US Shale: Growth moderating, but steady. Rising well productivity offsets lower rig counts.
  • Russia: Export volumes down modestly due to both technical and voluntary restrictions.
• Stocks:
  • OECD inventories are below the five-year average after persistent draws.
  • China continues to build strategic reserves, but at a less aggressive pace than in 2023.
• Refining Margins: Remain attractive but show signs of narrowing, especially in the Atlantic basin, on gasoline weakness.

⛅ Weather Outlook & Impact

• NOAA’s seasonal hurricane forecast for the Gulf of Mexico calls for an above-average season, increasing the risk of production disruptions on the US Gulf Coast.
• Hotter-than-average weather in major consuming regions (US, South Asia) is driving higher power generation demand and indirectly supporting crude utilisation.
• Dryness in South American regions is expected to have a minimal direct impact on global oil output.

🌐 Global Production & Stock Comparison

📌 Trading Outlook & Recommendations

• Bulls:
  • Consider holding positions or entering new longs on any retracement below last week's highs as fundamental support persists near-term.
  • Monitor speculative net length for signs of overcrowding that could trigger sharp but temporary corrections.
• Bears:
  • Wait for technical overbought conditions or strong rally failures before establishing short positions.
  • Focus on macro or inventory data releases for catalysts to change direction.
• Industry Buyers:
  • Consider incremental forward cover for Q3/Q4 if price dips materialise, as upside risks outweigh downside in the short term.

📆 3-Day Price Forecast (Key Exchanges)