The Commodities Feed: Oil Falls on Fundamental Bearish, but the Risk of Reverse Abundant
Energy
The oil market is under further pressure yesterday, settled below US $ 66/BBL for the first time since the beginning of June. Sentiment is bearish after the release of the International Energy Agency (IEA) and Energy Information Administration (EIA). But at the same time, hope is very high that Friday meetings between President Putin and Trump may eliminate many risks of sanctions that depend on the market.
This may be rather premature, with Trump threatens a severe consequence if Putin fails to approve a ceasefire. Obviously, there is a reverse risk for the market if a little progress is made. This can make Trump expand secondary tariffs on other Russian energy buyers. The expected oil surplus through the end of this year and 2026, combined with the OPEC reserve capacity, means that the market must be able to manage the impact of secondary tariffs in India. But everything becomes more difficult if we look at secondary tariffs on other Russian crude oil key buyers, including China and Türkiye.
The monthly oil market report of IEA is mostly bearish, with the agency expecting large inventory to be built by the end of this year and until 2026. Estimated IEA that global oil demand will grow by 680 thousand B/D this year and 700K B/D in 2026. Global oil supply is expected to grow by 2.5MB/d in 2025 and 1.9 bikon. Cutting seen from OPEC+. The number IEA illustrates the bearish picture, but the agency also highlights the potential risk around the supply of Russia and Iran because of the possibility of additional sanctions.
The weekly EIA inventory report is also quite bearish, with US crude oil inventory increased by 3.04 million barrels over the past week, more than 1.5 million barrels to build the American Petroleum Institute (API) reported the previous day. This increase was driven by stronger imports, which grew by 958k w/d week to week. For processed products, gasoline stock drops 792k barrels, as expected, during the summer months. Total gasoline inventory remains in line with an average of 5 years. There are also some further assistance for distillate stock, which increased by 714k barrels. While distillate supplies have increased by 11 million barrels since the beginning of July, the stock is still quite tight. This must continue to offer relative support for middle distillation.
Turning to European natural gas, investment funds reduce their net net in TTF with 17TWH to 105TWH during the last reporting week. This is the smallest position fund held at the Title Transfer Facility (TTF) since the end of May. Speculance is likely to reduce the risk of going to the top of Trump-Putin in the midst of uncertainty whether we will see the sanctions of the ceasefire or more stringent. The ceasefire is likely to put direct pressure on the price and cause an increase in noise around the restart of several Russian pipelines to Europe, as we saw at the beginning of the year. However, we still believe that restarting the pipeline is still very impossible.
Apart from the EU allowance (Euas) trading in a fairly solid way in recent weeks, investment funds continue to buy euas, increase contract 8.1 thousand net to 28.9 thousand contracts. This marks the third week’s increase in succession and also the biggest position held since March. While the EUA market is supplied well this year, which should limit prices, supply will fall in 2026, leaving the market tighter.
Source: Reuters
