WTI has dropped from the mid-$80s at end-July to about $74.25 on 6 August, as markets price an easing of Middle East risk and better flows through the Strait of Hormuz. Yet the physical picture has been slower to respond: Gulf crude and condensate exports averaged about 10.7 million barrels per day in July, broadly unchanged from June and still roughly 40% below pre-war levels, while tanker traffic remains constrained. OPEC has spare capacity and OPEC+ may lift quotas, but delivery depends on transport, refining and distribution. The next scheduled OPEC+ quota rise is 188,000 barrels per day from September, while US output is near record levels and Brazil and Guyana are adding supply, though shale producers have been restrained on capital expenditure.
Mixed Demand Signals and Inventory Trends
Demand signals remain mixed. The IEA sees global oil demand falling by around 1 million barrels per day in 2026 before recovering in 2027, the EIA expects an even larger decline this year, and OPEC still projects growth after trimming expectations; China’s June imports and refinery runs weakened as sourcing shifted, including towards Russia. US data showed commercial crude stocks up about 2.5 million barrels with Cushing higher, even as crude, gasoline and distillate inventories sit below seasonal norms and refineries run at high utilisation. Brent remains in backwardation. Technical levels cited include daily RSI near 42 and weekly RSI around 46, with support at $73-$74, then $71-$72 and $68-$70; scenario probabilities were 55% for $72-$82, 25% for $85-$100+, and 20% for $65-$70.
