Crude oil prices experienced a decline on Tuesday, influenced by weakening demand and a significant sell-off in refined products, according to ANZ analysts. The downturn affected the broader energy market sentiment, reversing trends seen earlier in the year. Previously, robust demand for diesel and gasoline had bolstered crude prices; however, the market’s tone has shifted to bearish.
The gasoline crack spread, representing the margin between gasoline and crude oil, decreased to its lowest level since February. Diesel crack spreads also declined, contributing to the overall pressure on crude prices. This shift is a notable reversal from earlier trends when strong demand for these refined products supported higher crude oil prices.
Contributing to the bearish outlook is a recent report from the US Energy Information Administration (EIA). The EIA projects that US crude oil production will reach a record 13.61 million barrels per day this year, despite subdued drilling activity and lower prices. Furthermore, the EIA forecasts that global oil inventories will increase by more than 2 million barrels per day in 2026, adding to concerns about oversupply.
Geopolitical factors also played a role in the price decline. Former President Donald Trump’s comments regarding the Russia-Ukraine war added further pressure. Trump suggested that Russia is in a stronger position and criticised European leaders’ approach, raising concerns that restrictions on Russian oil flows could be eased, potentially increasing supply. Brent Crude Oil was last trading near $US62 per barrel.
