WTI falls toward $94 as recovering exports ease supply fears

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WTI falls as supply fears ease

Rising U.S. inventories add pressure

Pressure is also being reinforced by the situation with U.S. inventories. The latest published EIA data showed commercial crude oil inventories rising by 2.97 million barrels to 426.4 million, while inventories at Cushing increased by around 2.27 million barrels to 23.75 million. For WTI, growth specifically at Cushing is particularly sensitive, as this is the main delivery point for futures contracts.

At the same time, gasoline and distillate inventories declined, so the picture for end demand looks better than the crude oil data suggest. The next EIA report is due tomorrow, September 30, and after today’s decline it could become one of the main short-term triggers for the price.

Middle East flows weaken the shortage premium

The main change in the Middle East is that the market is gradually reducing the premium for an immediate supply shortage. Oil flows through the Strait of Hormuz are recovering, the number of passing tankers has increased, and Saudi Arabia, after repairs, is once again using the East-West pipeline to move part of its volumes toward the Red Sea.

This allows exporters to bypass the most problematic routes and increase supplies despite the continuing conflict. It is precisely the recovery in physical exports that is currently working against WTI: the market sees that even amid high geopolitical tensions, the actual amount of oil reaching the global market is increasing.

Geopolitical risks keep upside potential alive

At the same time, geopolitical risk has not disappeared from the price completely. U.S.-Iran talks still have not produced a lasting solution around the Strait of Hormuz, while Qatar continues its mediation efforts. Additional support for the oil complex is coming from a tight refined products market and the continuing risk of disruptions to diesel supplies.

Therefore, the current decline in WTI reflects the recovery of export routes and a reduction in fears of an immediate shortage rather than a shift toward oversupply. As a result, in the absence of an escalation in the Middle East, pressure on WTI may persist, and prices could continue declining toward the psychological $90.00 level. A break above the $95.00 resistance level, as noted in WTI loses momentum as inventory growth caps the recovery, would lead to a move toward $96.00, but this rise could be used for selling.

An escalation of the conflict could trigger a more substantial rise in prices.

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