Recap: The oil market posted an outside trading day as the market weighed trade talk optimism against the potential for more oil supply from Venezuela as well as some negative economic news from the U.S. and China. The market remained pressured by the expectations for increased Venezuelan crude supply amid the news that the U.S. is preparing to allow partners of Venezuela’s PDVSA to operate with limitations in Venezuela. Analysts expect that the Venezuela’s oil exports could increase by about 200,000 bpd, easing tightness in the heavier crude market. The market also erased some early gains despite the optimism over trade talks in light of an economic report showing new orders for U.S. manufactured capital goods unexpectedly fell in June and China’s fiscal revenue fell 0.3% in the first six months of the year. The crude market rallied to a high of $66.74 in overnight trading before it erased its gains and sold off to a low of $65.06 ahead of the close. The September WTI contract settled down 87 cents at $65.16 and the September Brent settled down 74 cents at $68.44. The product markets ended the day lower, with the heating oil market settling down 67 points at $2.4062 and the RB market settling down 72 cents at $2.097.
Technical Analysis: The crude market on Monday will continue to trend sideways, barring any major trade deal announcements over the weekend. The market will also focus on a meeting of the Joint Ministerial Monitoring Committee, which includes ministers from OPEC+ producers, that is scheduled for Monday. The meeting is unlikely to alter the group’s existing policy, which calls for eight of the OPEC+ members to increase output by 548,000 bpd in August. The crude market is seen finding support at $65.06, $64.71, $64.38, $64.10, $63.93, $63.42, $63.11 and $62.84. Meanwhile, resistance is seen at $66.74, $67.54, $67.86, $68.16, $69.41 and $70.96.
Fundamental News: U.S. President Donald Trump said there was a 50-50 chance or perhaps less that the U.S. would reach a trade agreement with the European Union. EU officials and diplomats said the European Union and the U.S. could reach a framework deal on trade this weekend. The officials and diplomats said the deal would likely include a 15% baseline tariff on all EU goods entering the U.S. and probably a 50% tariff on European steel and aluminum. EU Commission President Ursula von der Leyen said she will meet U.S. President Donald Trump in Scotland on Sunday to discuss trade relations between the EU and U.S. On Thursday, the European Commission said a negotiated trade solution with the U.S. was within reach, even as EU members voted to approve counter-tariffs on 93 billion euros or $109 billion of U.S. goods in case the talks collapse.
OPEC said that the Joint Ministerial Monitoring Committee, scheduled to meet on Monday, does not hold decision making authority over production levels.
Four OPEC+ delegates said an OPEC+ panel is unlikely to alter existing plans to increase oil output when it meets on Monday, noting that the group is keen to recover market share while summer demand is helping absorb the increased output. The sources said that meeting is unlikely to alter the group’s existing policy, which calls for eight members to increase output by 548,000 bpd in August. The eight OPEC+ producers will hold a separate meeting on August 3rd and will likely agree to a further 548,000 bpd increase for September.
Iran said it would continue nuclear talks with European powers after “serious, frank, and detailed” conversations on Friday, the first face-to-face meeting since Israel and the U.S. bombed Iran last month.
IIR Energy said U.S. oil refiners are expected to shut in about 171,000 bpd of capacity offline in the week ending July 25th, increasing available refining capacity by 74,000 bpd.
Early Market Call – as of 8:25 AM EDT
WTI – Sep $66.42, up $1.35
RBOB – Aug $2.1315, up 4.11 cents
HO – Aug $2.4430, up 4.61 cents
