Massive volumes of crude are now arriving from sea to shore, ending months of floating storage buildup. OPEC+’s pause signals awareness of the oversupply, while traders brace for a washout as inventories rise and volatility threatens to break higher.
Massive Crude Inventories Reported by the EIA
WTI is down -1.71% for the week. Open at $61.40, High at $61.50, Low at $58.83 and Close at $59.84.
Department of energy EIA weekly storage
Red: 2025 levels. Source: Vortexa
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Global seaborne arrivals of both sanctioned and unsanctioned barrels rose 18% w-o-w, with future arrivals modelled to rise further. Source: Vortexa
Crude/cond on water (bn bbls, LHS) and global seaborne crude/cond arrivals (7-day MA) (mbd, RHS). Source: Vortexa
Global seaborne arrivals-both sanctioned and unsanctioned-rose 18% week-on-week, with forward models pointing higher. Source: Vortexa
The glut is draining into storage: arrivals are up sharply. This isn’t conjecture or opinion; it’s data. It’s signal, not noise. Debate the “realness” of the glut all you like-what matters is facts. Not what you think should happen.
Stick it in storage. Expect these charts to inflect up. Source: Vortexa
Over the past four months, crude is down -13.7%. Each dip has been met with the same chorus calling a bottom, each week proclaiming a rally that never comes. I’ve kept the same stance: sell rips, don’t buy dips-yet.
Support Line Holds, but for How Long?
The market’s calm masks deep apprehension. Traders are waiting to see the whites of the glut’s eyes. With arrivals now accelerating, we’re about two weeks from the seasonal turn. Expect volatility to wake up.
The $60 handle has been the line in the sand; there’s been no committed selling below $58.
Low Volatility Ahead of Key Reports
$OVX Oil volatility index Monthly bars.
$OVX Oil volatility index. Daily bars.
The week ahead sees the release of the OPEC Monthly report and the EIA STEO (Short term energy outlook). While these reports in themselves don’t offer anything market moving, they are the monthly assessment of the picture going forward.
Commitment Of Traders Report
No CFTC data (shutdown continues). ICE COT data for Brent offers little insight here. We’re working to integrate ICE EU positioning for a broader read once it’s stable.
What’s the Next Move?
As mentioned above, OVX is pretty low. I think the market has greatly under priced the glut of floating storage/ oil in transit. As more and more of these barrels land at their destinations, the market will price it fully in. Once this happens, there will be nothing more for the market to fear, but fear itself. I don’t think I would be alone in saying this market needs a good old traditional downside washout. Nothing solves low oil prices than lower oil prices. Once it gets cheap, if it gets A LOT cheaper – traders see more value than a fire sale.
This daily chart below is what the ultimate move will bring.
WTI DEC Futures. Daily bars. YVWAP
In all reality, its too early for me to even get involved shorting a washout down. The wave is not yet breaking. There will be a few more attempts at a rally I think. One thing for sure is that no level of current upside macro drivers has been sustained, backed or held. Just let the price show you that reality. The current 4-week top has been just after the Kuwaiti minister’s comments- as covered in last week’s report ‘Hot Taco’. The US sanctions on Russian oil have been fully priced in and out as a headline.
See a more realistic daily bar for chart for next week’s trade here.
WTI Daily bar. QVWAP.
So if we don’t get a macro headline shock, I think it’s going to be sideways to down by next Friday. Take into account the sell side pressure seen last week in equities. Again, I think it’s just a little too early for this to continue to breakdown in a massive way. BUT, we are now extremely close to a meltdown across both equities and oil. I am staying long biased Gold.
WTI December futures. 30 mins bars. WVWAP.
The Bottom Line
The glut is no longer theoretical; it’s docking. Expect a short-term shakeout as supply lands and sentiment capitulates. Once the fear clears, value will re-enter the market.
For more insight about what is driving oil prices, check out our educational section.