By Felipe Barragán, Expert Research Strategist at Pepperstone

September 18, 2025 –

“Oil traded with a push-pull feel on Wednesday as traders weighed a very bullish U.S. crude draw against softer signals in refined products and a macro backdrop still dominated by policy easing. The weekly EIA report showed a 9.3 mb decline in U.S. crude inventories—far larger than consensus—helped by record-low net crude imports as exports surged; yet that strength was tempered by a 4 mb build in distillates and a step-down in refinery runs and utilization, a mix that hints at patchy end-user demand even as crude balances tighten on paper. Gasoline stocks also fell, but the diesel build loomed large for sentiment. In other words, the draw looks more “trade-flow and runs” than “roaring demand,” which caps how far prices can run on inventory headlines alone.

Geopolitics kept a bid under the market but didn’t overturn the narrative. Fresh Ukrainian drone strikes on Russian refineries and port infrastructure reminded traders that export flows remain vulnerable to shock headlines, and the European Commission’s push to accelerate the phase-out of Russian fossil imports reinforced the idea of a lower and more uncertain Russian supply baseline. Still, recent attacks have produced short-lived price pops rather than lasting supply holes, so risk premia have faded quickly whenever physical disruptions proved limited.

The bigger swing factor is the policy and balance outlook. Markets head into the Fed decision expecting a 25 bp cut, with attention on how front-loaded the easing path might be—an easier Fed would support cyclical demand and reduce carrying costs, but an overtly downbeat tone from Chair Powell would blunt that support.

At the same time, the IEA’s September report leaned heavily toward an oversupply story into late-2025 and 2026—projecting stock builds at an “untenable” pace if OPEC+ proceeds with planned increases alongside robust non-OPEC growth—so rallies face a ceiling unless geopolitics escalate or producers recalibrate. Recent OPEC+ signals of modest output hikes from October underscore this tension: supply guidance is easing just as agencies warn the market can’t easily absorb more barrels.”