WTI retreats as diplomatic hopes reduce geopolitical premium

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WTI retreats as diplomatic hopes reduce geopolitical premium

U.S. inventory data keep the near-term tone cautious

In the U.S. market, the latest confirmed EIA data remain the figures for the week ended August 14: commercial crude inventories rose by 4.4 million barrels to 428.8 million, which was significantly worse than market expectations. At the same time, gasoline inventories increased by 0.7 million barrels, while distillate stocks fell by 1.5 million and remain noticeably below seasonal norms.

On the one hand, rising crude stocks are creating local pressure on WTI, while on the other, high refinery utilization and a tight balance in refined products indicate that the physical market remains far from weak. The new EIA report will be released later this week and will be especially important after today’s correction, as it will confirm or challenge whether the trend toward inventory accumulation is returning.

Medium-term supply conditions remain tight

The medium-term balance, meanwhile, remains tight. In its August report, the IEA forecasts a decline in global oil demand of around 1.6 million bpd in 2026 due to high prices and disruptions to trade, but supply is suffering even more: global production, according to the agency, is expected to fall by an average of 4.3 million bpd, while the market deficit in the third quarter is projected at around 1.8 million bpd.

In July, observed global inventories fell by another 69 million barrels, while the cumulative decline since the start of the conflict reached around 410 million barrels. The EIA takes a similar view: the agency expects serious restrictions on transit through Hormuz to remain in place until the end of August and forecasts Brent to average around $85 in the third quarter.

$82.80 becomes the key level after the selloff

The main source of uncertainty remains the Middle East. Independent trackers estimate current flows through Hormuz to be significantly below the volumes reported by Washington, while an oil tanker was damaged near the strait today, showing how quickly the situation could escalate again.

At the same time, as also noted in WTI holds near monthly highs as Hormuz risks support prices, the diplomatic channel remains open, and this is currently having a stronger impact on prices than sanctions rhetoric. For WTI, the key level after today’s decline is $82.80: holding above it would preserve the chance of a recovery toward $84-84.60. A loss of support would increase pressure and lead to a decline toward $82-81.

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