Brent Slides Back Toward $104 as Saudi Pipeline Restart Meets EIA's 400 Million Barrel Draw
Oil eased on signs Saudi Arabia is moving to partially restore its East-West pipeline, but the EIA's September outlook still shows global inventories down about 400 million barrels this year, US distillate stocks falling below 100 million barrels and Brent averaging near $90 in the second half - a forecast finalised before the September 11 outage.
Crude gave back part of its geopolitical spike as Saudi Arabia signalled it was working to partially restore flows along the East-West pipeline, the route that lets Kingdom barrels bypass the Strait of Hormuz. Benchmark quotes carried on mining.com showed Brent around $104.4 a barrel, down 4.21% on the session, with WTI near $101.85. Bloomberg's market wrap tied the slide to a broader easing of inflation pressure: gold rallied as much as 2.8% to above $4,380 an ounce and Treasury yields cooled after the Federal Reserve's quarter-point hike, the first since 2023.
The pullback does not change the underlying arithmetic in the EIA's September Short-Term Energy Outlook. The agency said global oil prices averaged $91 a barrel in August, $7 higher than July, and estimated that world inventories have already fallen by about 400 million barrels this year, with draws expected to continue through the end of 2026. It now sees Brent averaging around $90 a barrel in 2H26 before easing to $74 in 2027 as Middle East output recovers. Importantly, the outlook was finalised on September 3 and explicitly does not account for events after that date, so the September 11 pipeline shutdown and the price spike that followed sit outside the forecast.
Products are tighter than crude. The EIA expects US distillate fuel oil inventories to drop below 100 million barrels in September and to stay under the five-year low through much of 2027, with global distillate production running below year-ago levels. That tightness has lifted domestic prices and pulled US exports higher; the September outlook revised the 2026 distillate crack spread up 20.8% to $1.57 a gallon and the retail diesel price up 4.4% to $5.07 a gallon versus the August forecast. For refiners and industrial buyers, the crude-versus-products split remains the part of the curve that actually bites.
Gas markets are diverging. In the United States the EIA sees inventories reaching 3,969 billion cubic feet on October 31, about 5% above the five-year average, as Permian and Haynesville output builds; Henry Hub was quoted near $2.8 per MMBtu for October delivery in the week to September 11. Europe is in a very different position: AGSI+ data showed EU storage at 67.8% on September 11, down 19.6 percentage points from the five-year average, which kept TTF near $27 per MMBtu after a spike above $28 earlier in the week. Northeast Asia LNG was even firmer, with JKM assessed in the mid-to-high USD 28s per MMBtu on September 11, its highest in about two and a half years.
Power demand adds a further floor under US gas. The EIA now expects US electricity sales of 4,135 billion kilowatthours in 2026 and 4,211 billion in 2027, driven by data-centre development and higher industrial activity, with the West South Central region accounting for the largest share of growth. Combined with a distillate market that cannot rebuild stocks before 2028, the energy complex is left with a barrel that is cheaper than it was a week ago but a product and gas balance that remains tight.