Recap: The oil market erased its early gains and ended the session 2.15% lower as the market weighed perceived tightness against President Donald Trump’s announcement that the U.S. will impose 30% tariffs on U.S. imports from the European Union, Canada and Mexico beginning August 1st and his threat for sanctions on buyers of Russian oil. The crude market traded higher and rallied to a high of $69.65 early in the morning, supported by news that China’s crude oil imports in June increased 7.4% on the year to 12.14 million bpd, the highest since August 2023. However, the oil market erased its gains and sold off sharply by the early afternoon. The market was pressured by concerns that President Trump’s tariff policies will slow global economic growth and energy demand. Also, President Donald Trump announced that the U.S. was giving Russia 50 days to agree on a peace deal with Ukraine to avoid new sanctions, leaving traders questioning whether the U.S. would impose steep tariffs on countries that continue to trade with Russia. The crude market extended its losses to $1.58 as it posted a low of $66.87 ahead of the close. The August WTI contract settled down $1.47 at $66.98 and continued to trade lower, posting a new low of $66.84 in the post settlement period. The September Brent contract settled down $1.15 at $69.21. The product markets ended the session lower, with the heating oil market settling down 5.76 cents at $2.3898 and the RB market settling down 2.16 cents at $2.1654.
Technical Analysis: The crude market will continue to trade within its recent trading range as the market looks for further developments following President Trump’s threat of sanctions on buyers of Russian oil. The market’s gains will be limited as the fear of immediate sanctions on Russian oil diminished following President Trump’s announcement. The market is seen finding support at its low of $66.84, $66.50, $66.45, $65.75, $65.40, $65.23, $64.67, $64.50 and $64.00. Resistance is seen at $69.65, $71.20 and $72.90.
Fundamental News: U.S. President Donald Trump and NATO Secretary General Mark Rutte announced a plan on Monday to rearm Ukraine with missiles and other weaponry in its fight to fend off Russian invaders and warned of severe tariffs if Russia will not end the war. President Trump said he would impose “very severe tariffs” on Russia if no deal is made in 50 days. A White House official said President Trump was referring to 100% tariffs on Russian exports as well as so-called secondary sanctions, which target third countries that buy a country’s exports.
Hardline Iranian lawmaker Esmail Kosari said any closure of the Strait of Hormuz was still under review but no decision has yet been made. The possibility of Iran closing the waterway was speculated upon during the 12-day air war between Israel and Iran last month.
IIR Energy reported that U.S. oil refiners are expected to shut in about 171,000 bpd of capacity in the week ending July 18th, increasing available refining capacity by 24,000 bpd.
OPEC’s Secretary General, Haitham Al Ghais, said OPEC expects “very strong” oil demand in the third quarter and a tight supply-demand balance in the following months. Russia’s RIA news agency quoted OPEC’s Secretary General as saying on the sidelines of last week’s OPEC seminar in Vienna that the organization expected demand growth of 1.3 million bpd year on year in 2025 due to a strong global economy.
Early Market Call – as of 8:45 AM EDT
WTI – Aug $67.00, up 17 cents
RBOB – Aug $2.1805, up 1.85 cents
HO – Aug $2.4069, up 2.62 cents
