Geopolitical tensions are mixing poorly with increasing risk of oversupply.
West Texas Intermediate (WTI) US Crude Oil recovered ground on Monday as energy traders stepped back into barrel bets on continued geopolitical tensions in the Middle East, but steadily-rising US Crude Oil supplies are crimping upside potential in Crude Oil markets.
A ceasefire in the ongoing Israel-Palestinian Hamas conflict is proving to be a difficult task to accomplish, and Israeli forces continue to push into Palestinian territory. Israel’s refusal to accept a ceasefire deal are putting a floor beneath Crude Oil prices as investors remain wary of a potential spillover into neighboring regions crucial to global Crude Oil supply.
Despite renewed barrel buying on Monday, upside potential for Crude OIl remains limited as US production continues to outpace demand. According to the Energy Information Administration (EIA), US Crude Oil production in the Permian Basin is set to rise to its highest levels of barrel output since December of last year. Week-on-week barrel supply counts have steadily outrun forecasts as production overfills facilities, outrunning energy demand.
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