Energy Markets Rise on Inventory Draws and Dollar Weakness
September WTI crude oil (CLU25) rose +0.59 (+0.95%) to $62.72, while September RBOB gasoline (RBU25) gained +0.0225 (+1.08%), reaching a 2-week high. Support came from larger-than-expected U.S. inventory draws and a weaker dollar. Still, gains were capped by geopolitical developments and OPEC+ production concerns.
Crude Oil Market Analysis
Crude oil prices continue to trade in a choppy range, with intraday action showing strong buying support near $61.70 and resistance around the $63.00 level. Today’s recovery reflects both technical momentum and fundamental support from the latest EIA Weekly Petroleum Status Report. Inventories fell sharply by -6.01 million barrels, far outpacing expectations of a -0.85 million draw. Gasoline stocks declined by -2.7 million barrels, while distillates built by +2.3 million barrels, tempering the bullish tone.
Technical levels to watch:
- Support: $61.70 (recent swing low)
- Resistance: $63.00 (upper chart boundary)
- Breakout Potential: Above $63.00 could target $64.50; a failure to hold $61.70 opens risk toward $60.80.
Dollar Index Pressures and Political Risk
The U.S. Dollar Index (DXY00) turned lower by -0.12% after hitting a 1-week high earlier in the session. Political risk weighed on sentiment after President Trump called for Fed Governor Lisa Cook to resign amid a federal probe into alleged mortgage document falsification. FHFA Director Pulte’s letter to the Attorney General suggested potential criminal violations, raising concerns about Fed independence.
Markets initially favored the dollar after ECB President Lagarde signaled slower Eurozone growth, pushing the euro lower. However, the dollar reversed as traders digested political risks and the shifting Fed outlook. Federal funds futures are now pricing in an 84% chance of a -25 bp cut at the September 16–17 FOMC meeting, down from 93% before the strong July PPI report. Odds of an additional -25 bp cut in October stand near 55%.
OPEC+ and Global Storage Trends
Crude supply expectations remain a drag on sentiment. OPEC+ recently endorsed a +547,000 bpd increase starting September 1 as part of a broader plan to restore 2.2 million bpd by 2026. While July OPEC output slipped slightly to 28.31 million bpd, supply concerns linger. At the same time, Vortexa reported that global crude held in floating storage fell by -12% w/w to 82.49 million barrels, lending near-term support to oil prices.
Geopolitical Developments
Energy traders remain attentive to geopolitical risk. President Trump is pressing for a summit between Russian President Putin and Ukrainian President Zelenskiy, while European leaders weigh sending British and French troops as part of a peace framework. Any resolution to the war could be bearish for crude, as sanctions on Russian oil exports may be lifted, increasing supply on global markets.
Fundamentals Snapshot
- Crude inventories: -6.01 million bbl (vs. -0.85m expected)
- Gasoline inventories: -2.7 million bbl (vs. -0.325m expected)
- Distillate inventories: +2.3 million bbl (vs. +1.5m expected)
- Cushing: +419,000 bbl
- U.S. crude production: 13.382 mbpd, just below record highs
Outlook
The short-term outlook for energy markets remains constructive with crude holding above $62 and gasoline testing multi-week highs. Dollar weakness provides additional support, though political risk and OPEC+ supply increases present ongoing headwinds. Traders should watch for a potential breakout above $63 in crude, which could extend momentum, while any easing of geopolitical tensions could weigh on prices.
