To quote the trading desk at Stipelis: “It’s very difficult to be bullish in energy…”
Crude oil continues to struggle under the weight of weakening global demand, surging inventories, and a loss of technical support. The Stipelis Energy Index Indicator is down 17% year-to-date and off 26% from its November peak. West Texas Intermediate (WTI) has now fallen for three consecutive sessions and is down 27% from its January highs. Technically, the picture has deteriorated: oil is trading below its 50-day and 200-day moving averages, with volume confirming the bearish tone.
The macro landscape isn’t offering support. U.S. GDP contracted at a 0.3% annual rate in Q1—the first decline since 2022—while jobless claims have hit their highest level since 2021. Imports surged ahead of new tariffs from the Trump administration, suggesting front-loaded activity rather than real strength. Meanwhile, the Bank of Japan has slashed growth forecasts as the global trade war continues to weigh on sentiment.
China’s latest PMI came in negative, signaling weakness in manufacturing and exports. Oil demand from Asia remains fragile, and analysts warn that Brent could slip into the $50s if OPEC+ proceeds with a fresh production hike.
A 3.8-million-barrel build in U.S. crude inventories last week, along with ongoing surplus forecasts, only adds to the supply overhang.
Geopolitical developments are also pressuring prices. The new Ukraine–U.S. minerals agreement could shift energy dynamics, potentially giving Russia new channels to sell crude.
With oil now down 18% YTD, traders are questioning whether any short-term relief is even worth chasing.
The Stipelis Energy Complex Indicator may retest the lows it saw in April, which could bring crude oil to a print of $55 per barrel, RBOB to 1.88 per gallon, and heating oil to 1.93 per gallon.
To quote the trading desk at Stipelis: “It’s very difficult to be bullish in the energy futures complex but there is a bottom down here, somewhere.”
the Trading desk at stipelis: 5-1-2025