Oil Costs Face Draw back Threat as OPEC+ Output Surges and Indian Demand Softens…

Two forces are driving this push:

1. Market share defence: squeezing higher-cost producers like U.S. shale.
2. Income wants: monetizing nationwide reserves now whereas costs stay viable.

On the U.S. facet, output stays close to report highs, however drilling exercise is falling. Rig counts have dropped to multi-decade lows, and main gamers like Diamondback Power are slicing capital budgets to keep away from oversupplying into weakening costs.

India, lengthy a pocket of demand power, is displaying indicators of softening. July seaborne imports fell zero.2 mbpd month-on-month to four.four mbpd, whereas onshore inventories averaged 127 million barrels over the previous three months-down 5% year-on-year. Russian crude arrivals dropped to 1.four mbpd, a 20% decline. Seasonal components play a task, however discharge delays on the sanctioned Vadinar Refinery and potential cutbacks below U.S. tariff stress may push imports decrease.

Oil Market Construction Reveals Cracks Regardless of Backwardation

WTI’s ahead curve stays in backwardation, with front-month costs about $2 above January 2026 supply. Close to-term help comes from Center East summer season energy demand and regular Chinese language inventory constructing.

Spreads, nonetheless, have softened. The September/October immediate unfold fell $zero.84 final week, as September costs declined quicker than October. Some longer-dated spreads – equivalent to November/April – traditionally strengthen at the moment of yr, however provided that demand holds regular.