Global Tensions, Inventory Builds Shape Midday Oil Outlook

Europe faces its weakest natural gas storage cushion in 15 years heading into the winter heating season, according to a report from OilPrice.com. Equinor CEO Anders Opedal said Wednesday that the continent is unlikely to refill storage to even 80% before winter. European storage sites are currently about 54% full, the second-lowest level for this point in the year in 15 years and well below the five-year average.

The supply crunch is being driven by intense competition for LNG cargoes, with Asia pulling shipments away from Europe. Kpler estimates Asian LNG imports will hit a six-month high in July, while Europe's imports are projected to fall to their lowest level since September 2024. This dynamic is exacerbated by shipping disruptions from the U.S.-Iran war, which have tightened global LNG supply.

In the United States, the Energy Information Administration reported a 2.0 million barrel build in commercial crude oil inventories for the week ending July 17. Despite the increase, total stockpiles of 411.7 million barrels remain 6% below the five-year average for this time of year. The data, released Wednesday, also showed builds in refined products, with gasoline inventories up 800,000 barrels and distillates up 1.4 million barrels.

Despite the inventory builds, oil prices traded higher Wednesday morning. Brent crude futures were at $93.34 per barrel, up $2.33, while WTI was at $86.31, up $1.97, according to OilPrice.com. Price support is linked to persistent geopolitical risks, with a deal to restore shipping through the Strait of Hormuz described as "elusive as ever."

A separate report from Rigzone notes continued pressure on oil shipping routes. Vessels are turning away from the southern Red Sea after Houthi rebels announced an embargo on Saudi exports through the Bab el-Mandeb Strait. This chokepoint has become a critical lifeline for oil exports since the start of the U.S.-Israeli war with Iran, further squeezing global supply logistics.

For Bakken operators, the global tightness in gas and ongoing geopolitical premiums for oil provide a supportive price backdrop, even amid weekly U.S. inventory builds. The sustained competition for LNG underscores the value of associated gas production in the Williston Basin, while shipping disruptions continue to underpin global crude benchmarks that influence Bakken crude pricing.