The API reported a 7.5 million barrel draw in U.S. crude oil stocks

Recap: Oil prices received an early morning jolt after U.S. President Donald Trump warned Iran against attacking “anything American” and as traders awaited the release of U.S. data which is expected to show a decline in crude oil stockpiles. August WTI rose 48 cents, or 0.8%, to a high of $58.38 a barrel by 10:00 a.m. EST, while August Brent added 67 cents, or 1% to top the session at $65.53 a barrel. Despite the heavy rhetoric between the U.S. and Iran, WTI pulled back slightly, severing early gains. August WTI settled at $57.83 a barrel, down 7 cents, or 0.12%, while August Brent finished up 19 cents, or 0.29%, to settle at $65.05 a barrel. Prices reversed to the upside in post settlement trading after the API reported a 7.5 million barrel draw in U.S. crude oil stocks. August WTI rose to a fresh session high of $58.84 a barrel, while August Brent traded at $65.98 a barrel. July RBOB added 1.2% to $1.877 a gallon, for the highest front-month contract settlement since May 30. July heating oil also inched up by 0.8% to $1.923 a gallon. 

Technical Analysis: August WTI held above $57.72, the 50-day exponentially smoothed average (EMA), while holding below $57.95, the 200-day EMA. The current trend remains to the upside, with August WTI looking to move toward the $59.00 level. A settlement above the 200-day EMA will most likely spark a fresh round of technical buying. Resistance remains at $58.00, with additional resistance set at $59.00. Support is set at $56.60 and $55.81, the 10-day EMA.

Fundamental News: Iran’s Foreign Minister, Mohammad Javad Zarif, said that US sanctions imposed on Supreme Leader Ayatollah Ali Khamenei and other top officials in the country permanently closed the path to diplomacy between Iran and the US.  Meanwhile, Iran’s Economy Minister, Farhead Dejpasand, said the government has plans to protect the country against US economic pressure.  This is after US President Donald Trump targeted Iran’s Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday.   

The Secretary of the Supreme National Security Council, Ali Shamkhani, said Iran will take new steps to reduce its commitments under its nuclear deal with world powers on July 7th.  He said European signatories to the nuclear deal had not done enough to save it.  

France’s Foreign Minister, Jean-Yves Le Drian, warned Iran on Tuesday that a violation of its nuclear commitments to the 2015 nuclear deal would be a serious mistake and that France, Britain and Germany were making it clear to Iran that it was not in its interest to do so. 

Britain’s Foreign Secretary, Jeremy Hunt, said the country does not expect the US to request that the UK join a war with Iran and added that Britain would be unlikely to agree to join such a conflict.  However, he stated that Iran must comply with the nuclear deal. 

The Secretary of Russia’s Security Council, Nikolai Patrushev, said Russia has military intelligence that shows that a US drone was in Iranian air space when it was shot down by Iran last week.  He said any attempts to present Iran as a threat to international security are unacceptable.  He called for restraint on Iran.  Meanwhile, Russia’s Foreign Minister, Sergei Lavrov, said the situation around Iran was developing toward a dangerous scenario. 

Saudi Aramco’s chief executive, Amin Nasser, said the company is concerned about recent actions in the Gulf but added that it can meet its customers’ needs thanks to its experience and the availability of additional spare capacity. 

A refined products supply gap on the US East Coast due to the fire at Philadelphia Energy Solutions’ 335,000 bpd refining complex last week will be filled by shipments from the Gulf Coast region and Europe.  The destruction of its alkylation unit and damage from the fire could force the 200,000 bpd Girard Point section of the complex to remain shut for an extended period.  PES has since declared a force majeure on some gasoline deliveries. 

Early Market Call – as of 8:50 AM EDT

WTI – Aug $58.98, up $1.15

RBOB – July $1.9269, up 4.92 cents

HO – July $1.9485, up 2.69 cents

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