In this week’s Monday Macro View we discuss how U.S. oil production continues to challenge expectations. July’s output hit a record 13.6 million barrels per day, prompting the EIA to lift its forecast for both 2025 and 2026 to 13.5 million. This revision aligns with what we’ve been tracking for weeks — resilient shale output despite softer prices as shown through our FSC and FJC. OPEC+, on the other hand, remains unable to meet its own production targets, having delivered only about three-quarters of its pledged hikes since April. That shortfall — roughly half a million barrels per day — has kept Brent trading near $69 per barrel and sustained backwardation in the forward curve. The combination of record U.S. volumes and constrained OPEC+ capacity suggests that prices will hold a firm floor into early 2026, even as broader demand signals begin to cool.
The Market Sentiment Tracker this week shifts the focus to the U.S. consumer, where spending strength is increasingly concentrated. The top 10% of earners now account for nearly half of total consumption, while most households are only matching inflation through higher debt. Early caution among wealthy investors and the fourth consecutive quarterly decline in packaging shipments — down 5% year-on-year — point to fatigue setting in beneath the surface. That mix of narrow spending support and rising credit use implies a more fragile backdrop than headline GDP numbers suggest, and a softer landing could easily tip toward stagnation if confidence wavers.
In our Free Read this week we answer the most critical question: Why is China Stockpiling Oil? China has quietly bought more than 150 million barrels of crude this year — far beyond immediate consumption needs. While some of this reflects opportunistic buying at relatively low prices, new policy and strategic imperatives are clearly at work. A revised Energy Law now obliges both state and private firms to hold reserves, while expanding refining and petrochemical capacity ensures that additional crude will find a use. China’s storage tanks are only half full, giving it space to continue accumulating through 2026. In doing so, Beijing is effectively acting as a buffer — absorbing surplus barrels that might otherwise pressure prices, and reinforcing the floor created by OPEC+’s supply shortfall.
The picture that emerges is one of balance held together by constraint: U.S. output strength offsets OPEC+ underdelivery, China’s stockpiling steadies the demand side, and consumer fragility keeps macro risks alive. Markets are unlikely to break out decisively in either direction, but the next few months will test whether this equilibrium can hold without a sharper slowdown or policy shock.