Weekly oil inventory data from the EIA shows crude oil increased by 7.698 million barrels. This is much higher than the expected decrease of 1.288 million barrels. Gasoline inventories dropped by 2.724 million barrels, which is also more than the expected decline of 0.620 million. Distillates rose by 3.635 million barrels, exceeding the anticipated increase of 0.295 million. Cushing inventories increased by 0.690 million barrels, compared to last week’s 0.455 million.

Crude Oil Production and Price Impact

Oil production is now at 13.314 million barrels, up from 13.273 million the previous week. The price of crude oil is around $69.50, an increase of $0.28 just before the report was released. The unexpected increase in crude oil inventories, with over 7.6 million barrels added when a decrease was expected, indicates a bearish outlook for crude prices. This is the largest inventory surplus we have seen this quarter. It suggests a possible oversupply in the market in the coming weeks. U.S. oil production is still rising, now surpassing 13.3 million barrels per day, contributing to this supply surplus. Notably, recent reports from early July 2025 indicate that some OPEC+ members might be producing above their agreed quotas. This combination of high U.S. output and OPEC+ production issues is putting pressure on the market.

Market Opportunities and Strategies

Even with the negative crude data, the gasoline market shows a positive trend thanks to a larger-than-expected drop of over 2.7 million barrels. This indicates strong consumer demand, supported by recent Transportation Department data showing a 3% increase in summer highway travel in July 2025 compared to last year. This contrast creates clear trading opportunities. For derivative traders, this scenario suggests that betting on a widening gasoline crack spread may be profitable soon. This means buying gasoline futures contracts while selling crude oil futures. The data indicates refining margins should improve as gasoline demand holds steady, while crude supply is under pressure. Additionally, traders might consider bearish positions on crude oil, such as buying put options to benefit from potential price drops below $69. A similar large inventory surprise happened in late 2023, leading to a sustained drop in prices over the following month. The build at the Cushing delivery hub further supports this bearish outlook for WTI. Create your live VT Markets account and start trading now.

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