The EIA’s weekly oil inventory data reveals changes in different categories. Crude oil inventory decreased by 3.029M barrels, contrasting with the expected drop of 0.591M barrels. Gasoline inventory fell by 1.323M barrels, different from the anticipated decline of 0.406M barrels.
Distillates Inventory Update
Distillates inventory experienced a reduction of 0.565M barrels, while an increase of 0.775M barrels was projected. Cushing inventory rose by 0.453M barrels, compared to the previous week’s rise of 0.690M barrels.
Recent private data showed API Crude oil trading up by $0.75, reaching a price of $65.95. The price recently tested nearly its 100-day moving average of $64.97, inspiring confidence among buyers from a technical standpoint.
The latest inventory report shows a significant tightening in the market as of August 6, 2025. We saw a crude oil draw of over 3 million barrels, which is five times what analysts were expecting. This suggests demand is running much hotter than previously thought.
Gasoline and distillate stocks also saw surprise draws, which supports the bullish outlook. The drop in gasoline inventories aligns with recent government data showing US vehicle miles traveled in July 2025 were up 1.5% from last year, confirming a strong summer driving season. This unexpected demand for fuel is a key price driver right now.
Technical and Supply Side Factors
From a technical standpoint, buyers should feel more confident. The price holding firm above its 100-day moving average near $65 shows solid support. This level acting as a floor suggests that dips are being actively bought.
On the supply side, discipline from major producers continues to be a factor. This comes just weeks after the July OPEC+ meeting where the cartel reaffirmed its commitment to current production levels through the end of the quarter. This policy limits the potential for any immediate supply relief to meet the higher demand.
Given these factors, we think traders should look at bullish strategies for the coming weeks. This could involve buying call options to bet on higher prices or selling put options to collect premium, betting that the price will not fall below the recent support. These positions take advantage of the upward momentum we are seeing.
This market action is reminiscent of the summer of 2021, when under-forecasted demand drove a sustained price rally as the world emerged from lockdowns. Just like back then, the current surprise inventory draws could be the start of a new leg up. The market may be underestimating consumption strength again.
