Recap: The crude market traded lower on Wednesday after trading within Friday’s trading range for the previous two sessions as the market waits for the outcome of the U.S.-Iran talks in Doha. Indirect technical talks between the U.S. and Iran were underway, with Qatar and Pakistan serving as mediators. The oil market posted a high of $70.19 in overnight trading before it breached its previous support levels and traded down to $68.22, where it held some support ahead of the release of the EIA’s weekly petroleum stocks report. However, the market continued to sell off after U.S. President Donald Trump said talks in Qatar had gone well. Later, Vice President JD Vance expressed similar sentiment and added that the U.S. would not return to full combat unless it was necessary. The oil market sold off to a low of $68.03 in afternoon trading. The August WTI contract settled down $1.25 at $69.50 and continued to trend lower, posting a low of $67.92. The September Brent contract settled down 23 cents at $72.92. Meanwhile, the product markets were lower, with the heating oil market settling down 1.49 cents at $3.3168 and the RB market settling down 4.7 cents at $3.0144.
Technical Analysis: The market is seen trending sideways ahead of the long Fourth of July holiday weekend. While the comments by U.S. President Trump helped allay supply concerns, it remains to be seen what Iran will ultimately decide to do with regards to its control over the Strait of Hormuz. Iranian sources have stated that Iran is determined to gain international recognition of its control over the waterway. The crude market is seen finding support at $67.92, $67.50, $66.96, $63.86 and $63.16. Meanwhile, resistance is seen at $70.19, $71.60, $71.86, $72.50, $73.18, $74.45, $77.34, $78.14, $79.18, $80.15 and $81.00 to $81.68.
Fundamental News: The EIA reported that U.S. energy firms pulled 5.5 million barrels of crude oil from the Strategic Petroleum Reserve in the week ended June 26th, reducing the total amount of oil in the SPR to 325.7 million barrels, the lowest level since May 1983.
Iranian parliament speaker and chief negotiator, Mohammad Bagher Ghalibaf, said Iran has exported more than 40 million barrels of crude oil since the U.S. removed its naval blockade of Iranian ports and is now selling oil at prices about 20% higher than before the war. On Wednesday, TankerTrackers.com estimated Iran had exported 50 million barrels of crude oil since the U.S. lifted its naval blockade on the country’s energy exports two weeks ago.
Sources stated that OPEC+ oil-producing countries will likely agree to a further increase in their output targets from August when they meet on Sunday. The sources said the target will increase by about 188,000 bpd for August, the same as for June and July. Seven core members of OPEC+, which groups OPEC and allied producers including Russia, have increased their output quotas from April to July by almost 800,000 bpd.
Bloomberg reported that Saudi Arabia is selling millions of barrels of oil on a spot basis to customers in Asia as it increases its shipments from inside the Persian Gulf. Saudi Aramco has so far sold at least 6 million barrels of crude to customers across South Korea, Japan and China. The cargoes are to be delivered on three supertankers.
IIR Energy said U.S. oil refiners are expected to shut in about 417,000 bpd of capacity for the week ending July 3rd, cutting available refining capacity by 1,000 bpd. Offline capacity is expected to fall to 264,000 bpd in the week ending July 10th.
Early Market Call – as of 8:40 AM EDT
WTI – Aug $67.37, down 72 cents
RBOB – Aug $2.8911, down 4.75 cents
HO – Aug $3.1858, down 3.34 cents
