FINWIRES · TerminalLIVE
FINWIRES

Weekly Crude Prices Slip as Geopolitical Optimism Fades, Inventory Drawdowns Deepen

By

Crude benchmarks retreated over the week, with both WTI and Brent erasing prior gains as early optimism around a paused US military strike faded amid persistent supply bottlenecks and steep draws in US commercial inventories.

West Texas Intermediate settled at $97 per barrel, down from $105.66/bbl the previous week, while Brent closed at $101.14/bbl, down from $109.18/bbl a week earlier.

Futures began the week on a weaker note as profit-taking kicked in fueled by the lack of tangible progress in Middle East talks following the bilateral meeting between US President Donald Trump and Chinese President Xi Jinping.

Prices slid further after Trump posted on Truth Social that he had paused a scheduled military strike on Iran at Qatar's request, followed by statements at the White House Congressional Picnic indicating the war would end "very quickly."

However, this mid-week optimism collapsed by Thursday, forcing a sharp weekend rally.

"While there are signs of optimism, uncertainty reigns," ING analysts noted.

Beneath the shifting political rhetoric, the structural reality of global supply disruptions provided a hard floor for prices.

The strategic Strait of Hormuz continues to operate at a mere fraction of its pre-war baseline, keeping roughly one-fifth of global oil supply heavily choked.

The prolonged disruption in Hormuz has driven a sharp drawdown in global crude and fuel inventories, while the International Energy Agency reiterated its readiness to release additional emergency stockpiles if supply pressures intensify further, said Soojin Kim, research analyst at MUFG.

While J.P. Morgan analysts noted that the accelerating pace of global inventory depletion must ultimately force the chokepoint to reopen, they cautioned that even a June resumption would leave broader balances tight into the second half of the year.

On the supply side, the American Petroleum Institute initially reported a massive 9.1-million-barrel drop in US commercial crude stocks, which was later confirmed by the US Energy Information Administration, showing a 7.9-million-barrel weekly drawdown to 445 million barrels.

Additionally, US Strategic Petroleum Reserve inventories fell to 374.2 million barrels for the week ended May 15, down from 384.1 million barrels a week ago, marking a weekly decline of 9.9 mmbbls, EIA data showed.

HFI Research projected that, using the US inventory as a barometer, Brent is fundamentally positioned to breach $120//bbl within a month.

Hopes for an imminent peace deal evaporated following a Reuters report revealing that Iran's Supreme Leader, Ayatollah Mojtaba Khamenei, issued a strict directive banning the export of the country's near-weapons-grade enriched uranium, directly defying Washington's core demand for complete extraction.

Geopolitical friction compounded on Friday over a disputed Iranian proposal to establish a formal tolling and transit fee system for vessels navigating the Strait of Hormuz.

Speaking at an Environmental Protection Agency event, Trump rejected the maritime tax, reiterating that the US mandates the chokepoint remain a free international waterway.

Heading into the weekend, analysts at ING concluded that energy capital flows remain ultra-sensitive, leaving the market highly vulnerable to sudden whipsaws as long as a prolonged breakdown in talks threatens catastrophic physical shortages.

On the operational side, the US oil rig count rose by 10 from 415 the previous week to 425 in the week ending May 22, according to data from Baker Hughes (BKR) released Friday. That compares with 455 oil rigs in operation a year earlier.

According to a Bloomberg analysis, this is the biggest weekly jump in crude rigs since April 2022.

The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by 21 to 696 from 675 the previous week.

Meanwhile, money managers in the WTI crude futures and options markets maintained their net long positions in the week ended May 19, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released on Friday.

The data showed that money managers reported 216,414 long positions, up 2,286 from May 12, while short positions were down 6,906 to 77,640.

Related Articles

Oil & Energy

Weekly US Natural Gas Prices Rise on Heatwave Forecasts Despite 16-Week Low in LNG Feedgas Flows

US natural gas markets edged higher over the week as weather forecasts pointed to above-normal temperatures, even as consumption remained muted and LNG feedgas flows hit a multi-week low.The front-month June futures contract price rose to $2.92 per million thermal units on Friday, up from $2.86/MMBtu on May 18.The front-month June contract price rose to $3.004/MMBtu from $2.864/MMBtu on May 15, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released on Thursday.Natural gas spot prices rose by $0.31/MMBtu to $3.19/MMBtu during the week ended May 20, according to the EIA, from $2.88/MMBtu the prior week.This comes despite a 0.9 billion cubic feet per day, or 1% decline in total US natural gas consumption during the week, led by a 1.6 Bcf/d, or 14% drop in demand from the residential and commercial sectors. Electric power burn demand, however, increased by 1 Bcf/d, or 3%, during the same period.This was attributed to above-normal temperatures across most of the country during the week, which increased cooling gas demand.At the same time, natural gas supplies declined slightly by 0.2 Bcf/d, or less than 1%, amid a reduction in Canadian imports into the US, according to data from LSEG.Meanwhile, LNG feedgas flows dropped to their lowest level in 16 weeks, at 15.1 Bcf on Tuesday, from a record high of 18.8 Bcf/d in April, due to spring maintenance outages at several leading export terminals, according to data from LSEG.Prices rose across most regional hubs during the week, with Transco Zone 6 NY seeing a $0.41/MMBtu increase, while SoCal reported a $0.07/MMBtu decrease.The net injection into storage for the week ended May 15 was 101 Bcf, up from 85 Bcf the prior week, bringing total gas inventories to 2,391 Bcf, according to EIA data. The injection was above analyst forecasts of 96 Bcf, indicating a bearish build, according to data compiled by Investing.com.During the same period last year, the EIA reported a net injection of 119 Bcf, with the five-year average for this period at 92 Bcf.All regions reported a net injection of working gas into storage for the week ended May 15, with East and South Central up 31 Bcf, bringing their inventories to 419 Bcf and 972 Bcf, respectively. The Pacific region is now at a 34% surplus relative to its five-year average, while South Central has just moved to a 1% surplus.According to Pinebrook Energy Advisors, this week's EIA report indicated a "looser fundamental balance than the prior week," which was attributed to lower weather-related consumption across most sectors.They, however, noted that the heatwave experienced late last week was outside the reporting window and should appear in the upcoming week's report. "For now, the market appears to be balancing a bearish near-term storage number against early signs of a summer of strong demand," the report said.Weather forecasts call for above-normal temperatures to persist across most of the country from May 29 to June 4, according to the National Weather Service, which is expected to add to cooling gas demand over the next few weeks.Meanwhile, the US gas rig count dropped by three from 128 the previous week to 125, in the week ending May 22, according to data from Baker Hughes (BKR) released Friday. That compares with 108 gas rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, rose by 21 to 696 from 675 the previous week.A total of 34 liquefied natural gas-carrying vessels left US ports during the week, down by 3, compared to 37 vessels last week, with a total capacity of 128 Bcf, down by 13 Bcf compared to the prior week.In international markets, European TTF gas prices averaged $17.01/MMBtu for the week ended May 20, $1.33/MMBtu higher than the previous week.The Japan-Korea Marker averaged $18.33/MMBtu, about $1.40/MMBtu higher than the prior week.

$BKR
Oil & Energy

Rising Energy Costs, Hormuz Disruptions Threaten Global Growth Outlook, RBI Says

India's central bank warned Friday that elevated energy prices and disruptions to global oil shipments posed growing risks to the world economy and India's near-term outlook, as conflict in West Asia continued to pressure commodity markets and supply chains.In its May 2026 Bulletin, the Reserve Bank of India said global economic conditions remained fragile amid geopolitical tensions, volatile financial markets and uncertainty over growth and inflation.RBI said tanker traffic disruptions through the Strait of Hormuz had constrained global commodity markets in April, particularly energy shipments, leading to higher freight costs and renewed pressure on oil and fuel prices.Brent crude prices fluctuated sharply in April and May, initially easing during a temporary ceasefire in West Asia before firming again as the conflict escalated. The central bank said oil prices retained an "overall upward bias" amid evolving geopolitical developments.The World Bank Commodity Price Index rose sharply during the period, driven by higher energy, fertilizer and base metals prices, while the Bloomberg Commodity Index also climbed on gains in energy and agricultural commodities."Financial conditions, crude oil prices and capital flows continue to pose challenges to the external sector outlook," RBI said.The bulletin noted that prices of commodities dependent on the Strait of Hormuz transit route remained elevated through April and early May. Base metal prices, including aluminum, zinc and nickel, also rose because of supply disruptions and higher fuel costs.Rising fuel prices contributed to higher inflation across major economies. Inflation in the US climbed to its highest level in three years, while euro zone inflation reached its highest level since September 2023, driven largely by higher energy costs and elevated services prices, RBI said.Among emerging economies, inflation accelerated in China, South Africa and Brazil, also largely due to rising energy prices.Despite the global turbulence, RBI said India had entered the current phase "from a position of macroeconomic strength," supported by resilient domestic demand.The central bank added that strong services exports, positive foreign direct investment inflows, sizeable foreign exchange reserves and proactive policy measures by the government and RBI should help cushion the economy against external energy and trade shocks.

Oil & Energy

Market Chatter: Tehran Presses UN on US Blockade While Downplaying Reports on Iran-US Negotiations

Iran appealed to the United Nations over what it says is the growing humanitarian toll of US pressure tactics, according to Iran's state-run Islamic Republic News Agency.Iran also reportedly downplayed mounting media speculation over the scope of ongoing indirect negotiations between Tehran and WashingtonAli Bahreini, Iran's representative to the UN in Geneva, urged UN High Commissioner for Human Rights Volker Turk to investigate the humanitarian impact of what Tehran called an illegal US naval blockade on Iranian ports, IRNA reported Friday.In a letter to Turk, Bahreini described the blockade as part of a broader pattern of illegal aggression against Iran, with Tehran holding the US and Israel responsible for the resulting humanitarian consequences.Bahreini said the measures threaten Iranians' basic rights, including access to healthcare, essential goods, and life-saving medical equipment, while also undermining food security and livelihoods in southern Iran.Separately, Foreign Ministry spokesman Esmaeil Baqaei said on Thursday that reports circulating about the details of Iran-US negotiations cannot be confirmed, dismissing media claims regarding nuclear issues such as uranium enrichment and stockpiles as unsubstantiated speculation.Baqaei said the talks are currently centered on ending the conflict on all fronts, including Lebanon, adding that accurate information would only come from authorized officials and the negotiating team's spokesperson.Iran's foreign ministry did not respond to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)