Commerzbank’s Norman Liebke and Carsten Fritsch highlight that Brent and European gas have risen on renewed US–Iran tensions, but price reactions are more muted as inventories and rerouted flows ease tightness. Upcoming EIA, OPEC and IEA reports, plus Chinese trade data, will guide the oil outlook, with weaker Chinese crude imports seen as a potential drag on prices.

Tight stocks versus softening demand signals

"As hopes for an agreement between the US and Iran were dashed once again, the price of Brent crude and European natural gas rose slightly this week. However, it was notable that the price of Brent crude reacted much more modest than it did to similar developments a few weeks ago. This can likely be explained by the fact that oil inventories are lasting longer than expected, even though inventories of some oil products have already fallen significantly."

"Furthermore, the gap between supply and demand resulting from the closure of the Strait of Hormuz has been closed not only by drawing down inventories, but also, to a considerable extent, by rerouting oil exports, lower demand, and the release of oil reserves."

"In the oil market, Chinese foreign trade data — and in particular imports of crude oil and exports of petroleum products — are also likely to draw attention. These have recently fallen significantly, which, according to Kpler, is one of the main reasons why the price differentials between crude oil grades and petroleum products have narrowed considerably recently."

"Next week, the US Energy Information Administration (EIA) will release its monthly report, publishing forecasts for both oil supply and demand through the end of 2027 in its Short-Term Energy Outlook (STEO). Most recently, it reported a decline in daily global oil production of approximately 10.5 million barrels per day for March and April."

"At the same time, it is questionable whether the EIA will raise its forecasts for US crude oil production, even though drilling activity in the US has increased noticeably in recent weeks due to higher oil price level. The STEO report also discusses US LNG export capacity."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)