WTI remains volatile as Middle East risks counter bearish U.S. inventory data

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WTI remains volatile as Middle East risks offset bearish U.S. inventory data

U.S. inventories put pressure on WTI

On the other hand, U.S. fundamental data have noticeably cooled the oil rally. According to the latest EIA report, commercial crude oil inventories rose by as much as 17.4 million barrels over the week, to 424.4 million barrels, while the market had expected a significantly smaller increase. Oil inventories still remain around 2% below the five-year average.

Gasoline inventories fell by 1.0 million barrels and are around 6% below normal levels, while distillate inventories were virtually unchanged and remain about 12% below the five-year average. Thus, the large build in crude inventories looks bearish for WTI, but the ongoing shortage of petroleum products does not allow the report to be interpreted as a clear signal of a sharp weakening in final demand.

IEA and OPEC forecasts highlight demand uncertainty

Another factor limiting prices has been the new IEA and OPEC forecasts, with the estimates from the two organizations differing noticeably. The IEA now expects global oil demand to decline by 1.6 million barrels per day in 2026, explaining the weaker forecast by high fuel prices, supply disruptions, and the consequences of the conflict around Hormuz. At the same time, the agency estimates global supply in July at 101.5 million barrels per day, still 6.3 million below the year-earlier level, and forecasts a supply deficit in Q3.

OPEC is significantly more optimistic: the cartel expects global demand to grow by around 0.6 million barrels per day in 2026 and by around 2.2 million in 2027. This divergence highlights the market’s main dilemma: physical supply remains tight, while high prices and geopolitical disruptions are gradually starting to destroy demand.

WTI remains capped below $83.00

In the near term, the balance of factors remains mixed. Geopolitics and limited petroleum product supplies support WTI, while the sharp rise in U.S. inventories and revised consumption forecasts limit the upside. The bulls’ inability to break resistance around $83.00 indicates persistent risks of a return toward $80.50-80.00, and in the event of a break below the latter level, a decline toward $79.00-78.00. Until the situation in the Middle East fully stabilizes, a sustained decline in oil prices should not be expected.

As I wrote in the article WTI remains under pressure as demand concerns outweigh Middle East risks, a break above resistance at $83.00 would lead to a rise toward $84.50-85.00.

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