Recap: The crude market on Tuesday continued to trend lower as the market weighed the increasing OPEC+ output and concerns over weaker demand against U.S. President Donald Trump’s threats to India over its Russian oil imports. The market posted a high of $66.39 in overnight trading. However, the market’s gains were limited as President Trump again threatened higher tariffs on India’s exports over its Russian oil purchases. President Trump also stated that declining energy prices could pressure Russia’s President Vladimir Putin to halt its war in Ukraine. The oil market sold off to a low of $65.03 early in the afternoon and later settled in a sideways trading range during the remainder of the session. The September WTI contract settled down $1.13 at $65.16 and the October Brent contract settled down $1.12 at $67.64. The product market also settled in negative territory, with the heating oil market settling down 6.74 cents at $2.2502 and the RB market settling down 1.07 cents at $2.0915.
Technical Analysis: The oil market on Wednesday will remain headline driven as President Trump’s deadline for Russia to agree to a ceasefire in Ukraine by Friday approaches. The market will also look to the latest weekly petroleum stocks reports for further direction, which are expected to show slight draws in crude stocks. The crude market is seen finding support at its low of $65.03, $65.00 and $64.71, $64.38, $64.10 and $63.93. Meanwhile, resistance is seen at $66.39, $66.50, $67.74, $69.58, $70.41 and $70.51. Further resistance is seen at $70.96, $73.70 and $75.98.
Fundamental News: U.S. President Donald Trump said declining energy prices could pressure Russian President Vladimir Putin to halt the war in Ukraine. Last week, U.S. President Donald Trump set a deadline for August 8th for President Putin to move to end the war in Ukraine or face tougher U.S. sanctions. His administration has also been pressuring India and China to stop buying Russian oil. He said that the fall in energy prices was due to increased production, including by the OPEC countries and others, and he expected further declines.
The Financial Times reported that U.S. President Donald Trump’s administration is considering additional sanctions on Russia’s ‘shadow fleet’ of oil tankers if President Vladimir Putin does not agree to a ceasefire in Ukraine by Friday.
U.S. President Donald Trump said the U.S. was close to a trade deal with China and that he would meet his Chinese counterpart Xi Jinping before the end of the year if an agreement is struck. In regards to India, President Donald Trump said he would increase the tariff charged on imports from India from the current rate of 25% “very substantially” over the next 24 hours, given India’s continued purchases of Russian oil. He did not provide a new tariff rate for India.
Russia’s oil data shows that its crude output was slightly over the country’s OPEC+ target in July. Russia’s crude output increased to 9.13 million bpd in July, which is about 27,000 bpd over the required level for the month and the second time this year that output slightly exceeded the country’s target.
Chevron and Valero Energy are working to resume a supply agreement of Venezuelan crude to be refined in the United States under an agreement that was on pause, following a new license granted to the U.S. oil major. As Chevron waits for Venezuela’s PDVSA to allocate cargoes for August delivery, Chevron and Valero are negotiating details of their agreement, including resuming a ship-to-ship operation off Aruba. Valero’s cargo transfer off Aruba could restart as soon as this month, following mandatory inspections and vessel contracts in negotiation.
Early Market Call – as of 8:30 AM EDT
WTI – Sep $66.03, up 86 cents
RBOB – Sep $2.1161, up 2.84 cents
HO – Sep $2.2963, up 4.68 cents
