Oil pulls back as U.S. crude stockpiles jump, CPI looms
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Crude Prices Retreat After Inventory Build
Oil prices softened as market participants reacted to reports that U.S. crude stockpiles increased by 9.4 million barrels, according to API data. Brent futures declined, while WTI followed suit, giving back part of the recent three-day rally. Despite this, strong refining margins provided support, preventing a sharper selloff. Traders remain focused on today’s U.S. CPI release, which could influence broader market sentiment and expectations for energy demand. With core inflation expected at 3.1% YoY and the headline figure at 2.9%, any surprises could impact rate expectations and, by extension, oil market positioning.
Market Reactions & Positioning
WTI crude remains below its 20-day and 200-day moving averages, signaling that momentum remains fragile. The latest pullback appears to be profit-taking by short-term bearish speculators, awaiting a clearer macroeconomic signal from inflation data. While stockpile increases typically weigh on sentiment, declines in gasoline and distillate inventories suggest ongoing consumer demand, mitigating some of the downside pressure. Refining margins have strengthened, particularly in Singapore, reversing last month’s weakness and reinforcing demand for refineries to maintain high run rates.
U.S. Production & Supply Outlook
The Energy Information Administration (EIA) increased its 2025 U.S. crude production forecast to 13.59 million barrels per day, up slightly from previous estimates. However, demand projections remain unchanged, reinforcing expectations of a well-supplied market. Upcoming official EIA stockpile data will provide further clarity, particularly on product demand trends and whether refinery activity continues to support price stability.
Strategic Outlook for Oil Markets
Crude markets remain caught between inventory-driven weakness and improving refinery demand, while macroeconomic uncertainty continues to shape the broader risk environment. CPI impact on crude sentiment – A hotter-than-expected inflation print could weigh on oil by reinforcing a higher-for-longer rate environment, pressuring demand expectations. A softer print might support risk assets, providing a lift to oil prices. Technical resistance in WTI – Until WTI reclaims key technical levels, further short-term weakness is possible. The next support zone is near $71.50, while upside resistance sits around $74.50. Refining margins as a stabilizer – Improved refining profitability could continue to buffer crude from deeper declines, particularly as refineries ramp up ahead of seasonal maintenance cycles.
Oil prices softened as market participants reacted to reports that U.S. crude stockpiles increased by 9.4 million barrels, according to API data. Brent futures declined, while WTI followed suit, giving back part of the recent three-day rally. Despite this, strong refining margins provided support, preventing a sharper selloff. Traders remain focused on today’s U.S. CPI release, which could influence broader market sentiment and expectations for energy demand. With core inflation expected at 3.1% YoY and the headline figure at 2.9%, any surprises could impact rate expectations and, by extension, oil market positioning.
Market Reactions & Positioning
WTI crude remains below its 20-day and 200-day moving averages, signaling that momentum remains fragile. The latest pullback appears to be profit-taking by short-term bearish speculators, awaiting a clearer macroeconomic signal from inflation data. While stockpile increases typically weigh on sentiment, declines in gasoline and distillate inventories suggest ongoing consumer demand, mitigating some of the downside pressure. Refining margins have strengthened, particularly in Singapore, reversing last month’s weakness and reinforcing demand for refineries to maintain high run rates.
U.S. Production & Supply Outlook
The Energy Information Administration (EIA) increased its 2025 U.S. crude production forecast to 13.59 million barrels per day, up slightly from previous estimates. However, demand projections remain unchanged, reinforcing expectations of a well-supplied market. Upcoming official EIA stockpile data will provide further clarity, particularly on product demand trends and whether refinery activity continues to support price stability.
Strategic Outlook for Oil Markets
Crude markets remain caught between inventory-driven weakness and improving refinery demand, while macroeconomic uncertainty continues to shape the broader risk environment. CPI impact on crude sentiment – A hotter-than-expected inflation print could weigh on oil by reinforcing a higher-for-longer rate environment, pressuring demand expectations. A softer print might support risk assets, providing a lift to oil prices. Technical resistance in WTI – Until WTI reclaims key technical levels, further short-term weakness is possible. The next support zone is near $71.50, while upside resistance sits around $74.50. Refining margins as a stabilizer – Improved refining profitability could continue to buffer crude from deeper declines, particularly as refineries ramp up ahead of seasonal maintenance cycles.