Global crude benchmarks extended gains on Wednesday, with West Texas Intermediate (CL=F) climbing 1.09% to $62.40 and Brent (BZ=F) advancing 1.05% to $66.14, marking their strongest close in over a week. The move comes as traders react to tightening inventories at Cushing, Oklahoma — the key delivery hub for WTI futures — alongside modest production increases from OPEC+ that eased fears of an immediate glut. The American Petroleum Institute (API) reported a 1.2 million-barrel draw at Cushing for the week ending October 3, leaving total stocks near 23.47 million barrels, a seven-year seasonal low. Such thin levels amplify price sensitivity to pipeline shifts and refinery demand fluctuations, prompting traders to reprice near-term supply risk.
WTI Finds Support Above $62 as Physical Tightness Offsets Oversupply Narrative
The WTI curve has shifted modestly into backwardation, with near-term delivery commanding a premium over later contracts, signaling renewed physical tightness. Despite the EIA showing a 3.7 million-barrel nationwide build, the U.S. Energy Information Administration also recorded a rise in total product supplied — a proxy for demand — to 21.99 million barrels per day, the highest level since December 2022. That uptick overshadowed the inventory build and bolstered sentiment across the energy complex. Gasoline futures rose 0.62% to $1.906 per gallon, while Louisiana Light and Mars US blends hovered at $63.88 and $71.01 respectively, suggesting stable regional spreads.
Analysts at Price Futures Group noted that demand strength rather than speculative positioning drove this rebound. “We are in a structurally tighter market than the headline inventory numbers suggest,” said senior analyst Phil Flynn, pointing to strong refinery runs and low Cushing tank levels as underlying support for prices near $62–$63.
Brent Holds Above $66 as OPEC+ Manages Output and Russia Nears Quota
Brent crude (BZ=F) remained resilient above $66, supported by OPEC+’s cautious stance. The alliance’s latest update confirmed a modest 137,000 bpd increase in production targets for November — smaller than expected — as the group balances political and logistical constraints. Russia, despite ongoing sanctions and infrastructure damage from Ukrainian drone strikes, has pushed output close to its OPEC+ quota, Deputy Prime Minister Alexander Novak said Wednesday. Moscow’s production recovery to around 9.5 million bpd has been offset by reduced exports from its western ports due to refinery disruptions, keeping seaborne supply constrained.
The EIA’s Short-Term Energy Outlook further shaped sentiment by raising its 2025 Brent forecast to $68.64 per barrel, up from $67.80, and projecting WTI at $65.00. The revision reflects stronger summer demand and Chinese strategic stockpiling that absorbed excess barrels. However, the EIA cautioned that inventories could rise by 2.6 million bpd in Q4 2025, putting medium-term pressure on prices unless OPEC+ cuts output further.
Macro Tailwinds: Rate Cuts and Geopolitical Uncertainty Add Support
The broader macro landscape added to oil’s upside. Investors increasingly expect the Federal Reserve to cut rates by another 25 basis points at its October 28–29 meeting, following minutes from the September FOMC session showing concern over labor market weakness. A softer dollar and lower borrowing costs typically boost oil demand by easing import costs for emerging markets. The Dollar Index (DXY) stabilized below 99, giving additional breathing room for commodities denominated in USD.
Meanwhile, geopolitical risks continue to underpin prices. A senior Russian diplomat declared that “the impetus for a Ukraine peace deal has been exhausted,” implying that sanctions on Moscow’s energy exports will remain in place through winter. The ongoing strain on Russian refining capacity, coupled with attacks on the Kirishi and Primorsk facilities, has cut output by more than 400,000 bpd over the past two months, tightening European diesel markets and keeping Bonny Light elevated at $78.62, despite a 2.84% daily dip.