Oil prices experienced a significant sell-off despite data indicating tightening US oil market fundamentals, according to ING analysts Warren Patterson and Ewa Manthey [1]. The latest EIA data revealed record weekly declines in total US crude inventories, which included notable withdrawals from the Strategic Petroleum Reserve [1]. At the same time, US crude oil and refined product exports remained robust, exceeding 13 million barrels per day (b/d) over the week—well above the average of 11.1 million b/d exported between the start of the year and the onset of the war in Iran [1].
US gasoline inventories have fallen to their lowest seasonal levels since 2014, a development that supports refined product cracks as the market heads into the summer driving season [1]. The analysts also noted that additional crude oil tankers are passing through the Strait of Hormuz, highlighting ongoing supply disruptions in the Middle East [1].
Despite these tightening fundamentals, oil prices declined sharply, with market sentiment influenced by renewed hopes for a potential US-Iran agreement [1]. The combination of strong exports, low inventories, and geopolitical tensions underscores a complex market environment, but immediate price action was dominated by expectations around diplomatic developments [1].
CONCLUSION
US oil inventories have reached record lows, and gasoline stocks are at their weakest seasonal levels since 2014, even as exports remain elevated. However, oil prices fell sharply, driven by optimism for a potential US-Iran agreement. The market remains sensitive to both supply fundamentals and geopolitical developments.