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The economic drag is intensifying. S&P Global now sees Q1 U.S. growth at just 0.3%, while the Atlanta Fed forecasts a contraction. Meanwhile, inflation estimates have surged, with CPI projected as high as 4%. The risk of stagflation—rising prices and slowing growth—is putting direct pressure on fuel demand expectations.
EIA Inventory Surprise Confirms Softer U.S. Demand
The bearish turn was reinforced midweek by EIA data showing a 6.2 million barrel build in U.S. crude inventories—completely reversing expectations for a drawdown of over 2 million barrels. While gasoline stocks fell 1.6 million barrels, flat distillates and surging crude supplies painted a clear picture: demand is weakening, or production is running too hot.
This inventory report significantly undermined the prior week’s bullish narrative driven by geopolitical risk and technical breakouts. With storage levels rising, the supply-demand imbalance is coming into sharper focus.
OPEC+ Ramps Up Supply Despite Demand Risks
OPEC+ intensified bearish pressure by pulling forward a planned production increase. The group will now return 411,000 bpd to the market in May—triple the previously expected 135,000 bpd. This decision landed just as recession fears escalated and inventories rose, leading traders to question whether the alliance is misjudging demand conditions.
Adding to the pressure, a Russian court decision allowed Kazakhstan’s CPC terminal to stay online, removing a potential supply risk and pushing the market further into oversupply territory.
Oil Prices Forecast: Bearish Outlook Deepens Below $62
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