WTI was trading just above $80.00, down 1.69%, after sliding from just over $82.00 to just under $79.50 and slipping below its 50-day average. US commercial crude stocks rose by 17.4 million barrels in the week to 424.4 million, versus expectations for a 1.4 million barrel draw, yet inventories remain about 2% below the five-year average. The build was concentrated on the Gulf Coast as exports weakened and imports rose by 1.14 million barrels a day to 7.3 million; refineries ran at 96.2% of operable capacity, pointing to freight constraints rather than weaker demand.
Product markets stayed tight: gasoline stocks fell to 208.7 million, around 6% below the five-year average, and distillates slipped to 107.1 million, roughly 12% under. The IEA cut its 2026 demand view to a 1.6 million barrels-a-day contraction, 510K bpd more than in July, while OPEC trimmed its 2026 growth estimate to about 600K bpd from 780K, even as the IEA still sees a 1.8 million bpd shortfall this quarter. Gulf production recovered by 2.5 million bpd in July to 23.9 million but remains 8.3 million below its pre-conflict rate; redirected vessels totalled 59 as of August 12 and Strait of Hormuz transits fell to eight on Tuesday versus roughly 130 a day pre-war. July PPI was flat versus 0.2% expected, with the annual rate at 4.7% and core up 0.2% against 0.3% forecast, alongside falls in gasoline (5.7%), diesel (6.7%) and unprocessed energy materials (7.4); the June memorandum’s 60-day window ends on August 17, ahead of retail sales (0.2% consensus) and consumer sentiment (54 vs 55.2) on Friday.
WTI’s Drop Seen as Buying Opportunity Amid Gulf Coast Bottlenecks
We should view the recent drop in West Texas Intermediate (WTI) to just above $80 as a prime buying opportunity rather than a sign of a weakening market. While the massive 17.4 million barrel inventory build on the Gulf Coast looks alarming on paper, it is a localized shipping bottleneck rather than a global oversupply. With US refinery utilization sitting at a robust 96.2% and gasoline stocks 6% below their five-year average, underlying domestic demand remains incredibly strong.
Expectations for WTI Rebound and Market Volatility Ahead
We expect WTI to reclaim its 50-day exponential moving average of $80.72 shortly as these temporary shipping delays clear. Historical data shows that Gulf Coast export bottlenecks are usually resolved within two to three weeks, quickly draining local inventories back into the global market. Furthermore, the International Energy Agency still projects a steep global supply deficit of 1.8 million barrels per day for this quarter, which will inevitably force prices higher.
Traders must also brace for significant volatility ahead of the critical August 17 deadline on Monday, when the 60-day US-Iran negotiating window expires. Given that transit through the Strait of Hormuz has plummeted to just eight vessels a day compared to the historical average of 130, any escalation next week could trigger a violent short squeeze. We advise maintaining a bullish bias and targeting the $82.00 to $82.50 range, keeping a tight stop-loss just below the 200-day moving average at $78.04.
