Oil is stuck in the mud. Stuck in the mud of politics and conflicting signals about supply and demand. The oil market is having a hard time getting anything going lately as bearish and bullish forces are keeping prices locked in a range. While oil did see a larger than expected 2.7 million-barrel drop in crude supply in the Energy Information Agency (EIA) report and a big 743.000-barrel drop in Cushing Oklahoma, massive builds in products and a drop-in refinery runs raised fears of softening of demand.

The EIA reported that gasoline supply climbed by 7.5 million barrels last week, while distillate stockpiles rose by 3 million barrels. Refinery utilization fell by 1.5 ppt vs. an estimate of -0.6 ppt, raising concerns that refiners may be putting on the brakes as product supply starts to build. Yet with that refinery and crude drop, it also shows that OPEC cuts are working, and we should see supplies of crude continue to decline even as U.S. production surged by 200,000 barrels a day to 11.9 million barrels a day, up over 2 million barrels a day from a year ago.

While the shale numbers are impressive, the pullback in investment in shale and rigs probably mean we are close to a short -term peak on those numbers. U.S. refiners, of course, have their fill of the light shale oil and long for those heavier Saudi and Venezuelan barrels that are getting harder to get. U.S. Crude imports fell by 319,000 barrels a day.

Yet with the U.S. government still shut down and the U.S. China trade war not settled, half of the oil trade is either looking at the barrel as half empty while others are looking at it as half full. Fears of a slowdown in the economy is hurting sentiment and the lackluster EIA report did not erase fears of some slowing. Yet with central banks in the U.S., EU, and China staying more dovish, it should keep demand strong. The basest slowdown fear surrounding China has been offset by a near record 1.14 trillion-yuan liquid injection into the Chinese economy this week alone. With both China and OPEC doing whatever it takes to support the economy and the price of oil, the bulls win this battle in the end.