Despite signs of weakness in crude markets, surging premiums for gasoline and diesel have offset the pressure, helping oil prices erase early losses and turn positive.

Brent crude futures (BZ=F) climbed toward $65 per barrel, marking a third consecutive session of gains. Energy Aspects noted that, in addition to rising fuel premiums, technical traders known as Commodity Trading Advisors (CTAs) could further drive buying activity in the coming days.

James Taylor, head of quantitative services at Energy Aspects, said: "There are larger CTA buy triggers above $64.50 per barrel, tilting the risk balance to the upside." However, he added that hedging flows from traders may limit volatility.

After declining for the past three months, oil prices have trended lower this year. The prolonged slump stems from expectations of a global crude surplus, as OPEC+ eases production curbs and non-OPEC producers ramp up output.

The spread between front-month and second-month WTI contracts has narrowed to just a 7-cent premium, signaling weakening backwardation—a bullish structure where near-term prices exceed longer-dated ones—as markets anticipate oversupply.

Despite the softening crude futures curve, refined product markets remain resilient. Elevated fuel premiums (a key European diesel benchmark hit its highest level since early last year) and broader geopolitical risks have prevented a steeper crude price decline.

Tamas Varga of PVM noted: "There’s reason to believe crude would be lower without strong product market support. The narrowing backwardation in WTI and Brent is noteworthy, but unless product market support collapses—which remains uncertain—a major sell-off in absolute crude prices is unlikely for now."

OPEC will release its monthly market report on Wednesday, while the IEA will issue its annual outlook the same day. The IEA previously forecast record global crude surpluses by 2026 and will update its stance in Thursday’s monthly report.