Recap: The crude market ended the session 2.07% higher as some risk premium returned to the market amid renewed U.S.-Iran hostilities. The U.S. conducted retaliatory strikes after President Donald Trump vowed on Tuesday to respond to the downing of a U.S. Apache helicopter near the Strait of Hormuz, while Iran’s Revolutionary Guards carried out missile and drone attacks on U.S. military bases in Jordan, Kuwait and Bahrain on Wednesday in retaliation for American strikes on Iranian targets. Also, President Trump said he was close to ordering new strikes against Iranian power plants and bridges as Iran was taking too long to make a deal. The crude market posted a low of $87.39 in overnight trading before it erased its losses and traded to $90.42 early in the morning. The market remained at the upper end of its trading range in light of the EIA reporting a larger than expected draw in crude stocks of 7.2 million barrels, with energy firms pulling crude from the SPR for an 11th consecutive week. The market continued on its upward trend and posted a high of $91.84 after President Trump on Wednesday afternoon reiterated his threat to strike Iran if it did not sign a peace deal. The July WTI contract ended the session up $1.83 at $90.03 and the August Brent contract settled up $1.65 at $93.10. The product markets settled higher, with the heating oil market settling up 7.08 cents at $3.6126 and the RB market settling up 8.88 cents at $3.1099.
Technical Analysis: The oil market will remain headline driven as the market awaits to see whether there will be further strikes between the U.S. and Iran. The market is waiting to see whether President Trump will proceed with his threat to strike Iran’s power plants and bridges, unless Iran signs a peace deal. The market is seen finding support at $87.39, $85.95, $84.28, $82.50 and $77.22. Meanwhile, resistance is seen at $91.84, $92.78, $95.47, $95.91, $97.00 and $99.43.
Fundamental News: The EIA reported that crude inventories fell by 7.2 million barrels to 426.5 million barrels in the week ended June 5th. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 801,000 barrels on the week. The EIA reported that U.S. energy firms pulled crude from the Strategic Petroleum Reserve for an 11th consecutive week, cutting the total amount of oil in the SPR to 349.2 million barrels, the lowest level since August 2023.
The Department of Energy said the U.S. issued a request for proposals for an exchange of up to 40 million barrels of crude oil from the country’s SPR.
Shell CEO, Wael Sawan, said restoring a balanced crude oil market amid heavy inventory drawdowns will take a year and possibly longer. He said that while inventory drawdowns were helping the global market right now, they amounted to “borrowing from the future” and there was a deficit of 1.2 billion barrels of crude at the moment.
According to a Reuters survey, OPEC oil output in May hit its lowest level in more than two decades, as a U.S. naval blockade cut Iran’s exports and Iran’s effective closure of the Strait of Hormuz cut exports by other Gulf producers. Output by the 11-member Organization of the Petroleum Exporting Countries fell by 1.06 million bpd month-on-month to 16.13 million bpd. That was the lowest monthly figure since at least 2000. Saudi Arabia’s output fell by 300,000 bpd to 6.5 million bpd in May, while Kuwait’s output increased by 20,000 bpd on the month to 580,000 bpd and Iran’s output fell by 1 million bpd to 2 million bpd.
IIR Energy said U.S. oil refiners are expected to shut in about 74,000 bpd of capacity in the week ending June 12th, increasing available refining capacity by 62,000 bpd from the previous week. Offline capacity is expected to fall to 2,000 bpd in the week ending June 19th.
Early Market Call – as of 9:00 AM EDT
WTI – July $90.22, down $1.63
RBOB – July $3.1194, down 2.01 cents
HO – July $3.6182, down 4.41 cents
