Oil prices dip ahead of this week's Trump-Putin meeting on Friday
The current state of the crude oil market is characterised by downward pressure on prices due to an ongoing global supply glut and OPEC production increases, despite some geopolitical uncertainties.
Trump-Putin Summit Impact
The recent summit between Donald Trump and Vladimir Putin in Alaska raised hopes for a Russia-Ukraine peace deal, which could lower fuel prices by easing sanctions. However, the summit ended without a ceasefire but with a reportedly “productive” tone and slow progress. This lack of a breakthrough and a softer stance on imposing further sanctions has temporarily eased fears of sharp supply disruptions, causing crude oil prices to fall about 1-1.8% around the summit dates. The market reacted with some short-term price weakness due to reduced risk of stricter sanctions, though the underlying geopolitical tensions remain unresolved [1][3][5].
Global Oil Supply Glut
The International Energy Agency (IEA) expects global oil supply to continue rising with forecasts of increases by approximately 370,000 barrels per day (bpd) in 2025 and 620,000 bpd in 2026. The market is facing an oversupply scenario, with a surplus equivalent to about 1.5% of global consumption estimated by Q4-2025. This glut weighs on crude prices as supply outpaces demand growth [2][3].
OPEC+ Production Increases
OPEC+ officially approved an additional increase of 547,000 bpd in crude production starting September 2025, reversing part of a two-year production cut as part of its strategy to restore approximately 2.2 million bpd by September 2026. Despite some supplies remaining offline, this progressive increase adds to the market’s supply glut and suppresses prices. OPEC July production fell slightly but remains high overall [2][4].
Market Sentiment and Pricing
The crude oil market has reacted with modest price declines (Brent oil dropped to about $65.85/barrel; WTI around $62.8/barrel) after the summit and amid oversupply. Speculators have been net sellers, reducing long positions significantly, reflecting bearish sentiment about near-term price prospects. Meanwhile, potential tariffs and sanctions on Russian oil buyers (e.g., India) still create some uncertainty but have been delayed or softened following summit talks [2][4][5].
US Oil Rig Count and Inventories
The number of active US oil rigs is just above the 3.75-year low of 410 rigs from August 1. As of August 1, US crude oil inventories were -6.5% below the seasonal 5-year average, according to last Wednesday's weekly EIA report. Gasoline inventories were -0.3% below the seasonal 5-year average, and distillate inventories were -16.1% below the 5-year seasonal average [6].
Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022.
Bullish Factors
Bullish factors today include the slightly lower dollar and President Trump’s 90-day postponement of the higher tariffs on China.
Disclosure and Reporting
All information and data in the article is solely for informational purposes. The report did not indicate any positions held by Rich Asplund in any of the securities mentioned in the article. Crude oil stored on tankers that have been stationary for at least seven days fell by -5% w/w to 80.52 million bbl in the week ended August 8, according to Vortexa. September WTI crude oil (CLU25) is currently down -1.09%, and September RBOB gasoline (RBU25) is currently down -0.21% [7].
[1] Trump-Putin summit ends without ceasefire but with 'productive' tone
[2] OPEC+ endorses additional 547,000 bpd increase in crude production for September 1
[3] IEA warns of oil market surplus by Q4-2025
[4] OPEC July production falls slightly but remains high
[5] Trump threatens new tariffs on countries buying Russian energy
[6] EIA weekly report on US crude oil inventories
[7] Vortexa report on crude oil tanker storage
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