WTI and Brent under pressure: What’s driving the crude oil market?

Oil prices are lower this morning after jumping yesterday due to Trump’s “maximum pressure” plan on Iran, as traders assess the impact of the U.S.-China trade war on demand.

“Trump’s tariff chaos and the trade war are not good for global growth and oil demand growth,” said Bjarne Schieldrop, Chief Analyst for Commodities at SEB AB. “But, as has often been the case before, supply disruptions can quickly and suddenly reverse the situation.”

API reported a huge increase in crude oil and gasoline inventories overnight, but a large decline in distillates (cold weather?).

API data:

• Crude Oil: +5.025 million barrels
• Cushing: +110 thousand barrels
• Gasoline: +5.4 million barrels
• Distillates: -7.00 million barrels

DOE data:

• Crude Oil: +8.64 million barrels – the largest increase since February 2024
• Cushing: -34 thousand barrels
• Gasoline: +2.23 million barrels – 12th consecutive week of increase
• Distillates: -5.47 million barrels – the largest decline since March 2021

Last week’s inventory data showed significant volatility – a huge increase in crude oil and a serious drop in distillates…

Including a 250 thousand barrel increase in the Strategic Petroleum Reserve (SPR), last week marked the largest build in crude oil stocks since February 2024.

U.S. crude oil production recovered after the impact of cold weather…

WTI extended its losses after the massive crude oil withdrawal…

Crude oil prices have pulled back significantly from their peak above $80 per barrel last month. While much of this decline was driven by market volatility related to Trump, certain segments of the physical market are also showing signs of weakening.

Finally, the nearest time spread for Brent – the premium for immediate delivery compared to next month’s futures, which is an indicator of market conditions – closed on Tuesday at its weakest level in four weeks.