U.S. emergency oil stocks dropped to 316.5 million barrels, reaching the lowest level since the early 1980s, while prediction markets showed weakening odds for crude oil hitting new record prices soon.
Market Reaction and Supply Factors
The Energy Information Administration reported the reserve decline for the week ending July 10. Despite tensions in Iran disrupting oil supplies and gasoline prices surpassing $4, traders on Polymarket assigned only a 7% chance that crude oil would reach the 2008 peak of $147.27 per barrel by September 30, down from 8% a week earlier. The December 31 contract held a slightly higher 14% probability though it fell from 16% on the previous day.
This divergence indicates traders expect price increases but are cautious about setting a new record price in the near term. Polymarket’s volumes, including approximately $2 million in total contract volume and $53,600 in daily turnover, suggest active price discovery despite shallow liquidity that can exaggerate price movements.
The U.S. Department of Energy authorized a release of 172 million barrels starting March 11 as part of a coordinated effort with International Energy Agency members to mitigate supply constraints caused by restricted exports from the Middle East through the Strait of Hormuz. This release helped ease immediate scarcity but significantly reduced reserve capacity for future emergencies, a factor likely contributing to traders’ cautious sentiment.
Stocks fell by 3 million barrels during the reported week and remain 86.2 million barrels below levels seen in 2025. The ongoing geopolitical issues and reserve drawdowns create uncertainty over the supply outlook, influencing market participants to weigh short-term price strength against the risk of longer-term shortages.
This material is for informational purposes and does not constitute financial advice.
