Oil Swings Higher as Fuel Strength Offsets Weak Crude Signals

Core Insights - Oil prices are experiencing upward momentum, with West Texas Intermediate crude rising as much as 1.5% towards $61 a barrel, driven by increasing premiums for fuels like gasoline and diesel [1][4] - The market is witnessing a potential shift as commodity trading advisors may trigger additional buying if prices exceed $64.50, although volatility may be limited by hedging flows from dealers [2][5] - Despite recent gains, the oil market has faced a downturn this year due to expectations of a global surplus, exacerbated by OPEC and its allies loosening output curbs while non-OPEC drillers increase production [3][5] Market Dynamics - The prompt spread of West Texas Intermediate crude has narrowed to a premium of just 7 cents a barrel, indicating a weakening bullish backwardation price structure as oversupply is anticipated [4] - Refined product markets remain robust, with strong premiums for fuels, particularly in Europe, which have helped sustain crude prices amidst geopolitical risks [4][5] - Analysts suggest that without the support from refined products, crude prices would likely be lower, indicating a reliance on these markets for price stability [5] Future Outlook - OPEC is set to release its monthly market analysis, while the International Energy Agency will provide an annual outlook, with forecasts indicating a record annual glut for 2026 [5]