Hey folks,
You’d think a draw of almost 3 million barrels of crude oil would send prices higher.
That’s the normal playbook: Lower supply usually means higher prices — especially when it comes as a surprise.And this one was a surprise.
Analysts were expecting a surplus of a million barrels. Instead, we got a 4-million-barrel swing in the other direction.
But here’s the kicker: crude didn’t move.
Oil shrugged. Traders yawned. And that’s what caught my attention.
Same thing happened with gasoline.
We were supposed to see inventory builds there too — instead, inventories dropped by 2.5 million barrels. That’s a big deal heading into summer, when folks usually hit the road and demand spikes.
So what gives?
Well, it might have to do with that pesky GDP revision. The economy was revised up, but it’s still in negative territory — and remember: two negative GDP prints in a row means recession.
Add in rising jobless claims, and suddenly that inventory draw doesn’t feel as bullish. Because what good is tighter supply if everyone thinks demand is about to fall off a cliff?
Then there’s OPEC, which is talking about increasing production, not cutting it. So even if inventories are low now, traders might be betting on more oil flooding in later.
And just to add another wrinkle: Venezuela’s stirring the pot again.
U.S. companies like Chevron are being allowed back into Venezuelan oil assets… but at the same time, Venezuela is reportedly pushing into Guyana’s oil fields. If that escalates, it could spook the energy markets.
For now, crude is still holding that key $60 level. But if it breaks below that, things could get a lot more interesting.
I just covered this and more in my free bi-weekly Market Radar session.
Click here to watch the whole episode
Stay sharp,
—Geof
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