Oil markets have been stable lately, with Brent prices rising just under 0.5%. This small increase is thanks to reduced trade tensions between the US and the EU, especially after President Trump stepped back from a tariff threat regarding Greenland. The International Energy Agency (IEA) updated its oil demand growth prediction for 2026. They raised it from 860,000 barrels per day to 930,000 b/d. This shift suggests a return to normal economic activity and lower oil prices. Still, the IEA warns that a significant supply surplus will likely continue until 2026.

Market Developments

In other news, markets are witnessing several important moves. Gold remains strong above $4,800 as traders wait for delayed US PCE data. The GBP/JPY exchange rate stays stable despite fiscal concerns in Japan, while US initial jobless claims rose to 200,000 last week. In the crypto market, Bitcoin has gained slightly, now just above $90,000. Ethereum is stable around $3,000 in a volatile market, and XRP has shown slight growth for the second consecutive day. Axie Infinity also sees gains, driven by increased interest from large investors. The easing of trade tensions has created a calm but consider this a chance to prepare for potential issues. Even with a slight increase in demand forecasts, a significant supply surplus is expected to dominate the market until 2026. This fundamental imbalance will likely return to focus once geopolitical concerns fade. We have seen pressure on supply build for months, especially since late 2025. Non-OPEC+ production, especially from the US, hit record highs of over 13.3 million barrels per day, contributing to the global oversupply. Recently, the EIA reported a surprise increase in US crude inventories by 5.5 million barrels, indicating that supply continues to outstrip demand.

Outlook and Trading Strategy

The recent demand growth upgrade to 930,000 barrels per day is encouraging, but it may not be enough to absorb the excess supply. For example, data from China shows its manufacturing PMI dropped to 49.7, signaling a slight contraction that could reduce energy import demand. This indicates that support for prices from demand may be weaker than it seems. Given this situation, the current low market volatility is a good chance for traders. We believe it’s wise to take bearish positions, such as buying put options on Brent or WTI crude futures for the upcoming months. These strategies are currently affordable and offer a way to profit from a potential price drop when attention shifts back to the ongoing supply surplus. Create your live VT Markets account and start trading now.

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