Trading Signals & Macro Trends
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1
US crude oil balance tightens on higher runs; WTI backwardation to steepen
Highlights:
US crude oil stocks are expected to show a draw for the third consecutive week. WTI prices are expected to narrow against other global benchmarks on stronger domestic demand for crude oil as refinery throughput ramps up per seasonal factors.
The OPEC+ announcement of supply increases last week did not tank crude oil prices. The ramp up in buying for summer refinery runs appears to have absorbed the incremental supply.
US gasoline stocks are now entering the season of declines. The Gulf Coast is adequately supplied, but the East Coast is potentially approaching a supply crunch with imports remaining low despite a positive arbitrage.
The US Energy Information Administration (EIA) weekly inventory report is expected to show a commercial crude oil stock draw of 2.46 million barrels for the week ended 9 May on lower levels of imports. This crude oil stock draw brings inventory 24.5 million barrels below the five-year seasonal average but 15 million barrels above the seasonal minimum. The 2.5-million-barrel draw reported for the week ended 2 May aligned with Rystad Energy’s estimate of 2 million barrels with the difference related to slightly lower production and imports than estimated. The EIA adjustment factor for the week was 5,000 barrels per day (bpd), a decrease of 545,000 bpd from the previous week. The 52-week rolling average adjustment factor that is used in our balance estimate came in at -32,350 bpd for the reporting period versus -34,810 bpd the week before.
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2
EIA projects 420,000 bpd inventory build in 2025 as supply outpaces demand
In the latest Short Term Energy Outlook (STEO) data released by the Energy Information Administration (EIA), global balances have been lowered by 120,00 barrels per day (bpd) across 2Q25, 3Q25, and 4Q25. Despite this, the expectation of relatively strong inventory builds leads the agency to forecast a decline in crude prices during the same period. Slowing global demand growth, due to tariffs imposed by the US and some of its trade partners, is putting pressure on prices as these builds continue. Members of the OPEC+ group are doubling down on their desire to speed up production growth, which is also influencing the EIA’s forecast for Brent and West Texas Intermediate (WTI) prices.
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3
Alert: Impact of India-Pakistan escalation on oil trading
Highlights:
The sharp escalation in tensions between nuclear armed neighbors India and Pakistan has brought to the forefront the importance of emergency preparedness, particularly in the energy sector.
In terms of daily crude demand, India consumes 5.40 million barrels per day (bpd) compared to Pakistan's 0.25 million bpd, according to Rystad Energy analysis. A comparison of their strategic petroleum reserves reveals a significant disparity – India has a strategic reserve capacity of 39 million barrels, with 21.4 million barrels currently available. In contrast, Pakistan lacks any strategic reserves, leaving the nation vulnerable to disruptions in supply.
In addition, India's commercial stockpiles of close to 160 million barrels can sustain the country for around 33 days, whereas Pakistan's stockpiles will last for 20 days.
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4
Macro headwinds and OPEC+ output increase push WTI to fresh lows
Highlights:
With OPEC+ output increases contributing to the recent price weakness, markets will likely watch compliance levels more closely, particularly from producers with a history of overproduction.
If the Fed chair acknowledges that tariffs are now feeding into inflation without supporting growth, it may trigger broader risk-off sentiment. That may low oil demand expectations, stall investment and reinforcing macro-driven pressure on crude.
Diesel demand continues to weaken on soft freight and trade activity, and with jet fuel prioritized for summer travel, middle distillate margins may remain under pressure unless industrial indicators improve.
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5
OPEC+ navigating risky experiment with unwind of cuts
Key highlights:
May to August fundamentals signal a tightness in the crude balances, with higher runs growth projected versus supply growth. This provides a good opportunity for OPEC+ to experiment with a larger-than-previously-guided unwind in June.
Post-August fundamentals, however, do not support an unwind. Fears of flipping the crude market into contango are likely to weigh heavily on OPEC+’s decision-making, unless significant supply disruptions occur or demand concerns ease.
Key signposts to watch include supply disruptions in Iran, Venezuela, Mexico, and Russia, as well US Strategic Petroleum Reserve refill goals.
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