Recap: The crude market traded lower, remaining within its recent trading range, amid progress in talks between the U.S. and Iran. The market traded higher during Friday’s shortened trading session due to the Juneteenth holiday and continued to trend higher on its reopening on Sunday evening, posting a high of $78.93. The market was supported amid reports that Iran had closed the Strait of Hormuz over the weekend, with Iran stating that the U.S. failed to meet its commitment to halt fighting in Lebanon. However, the market erased its gains as U.S. Vice President JD Vance said progress was made in talks with Iran to allow nuclear inspectors into the country and talks on inspections possibly beginning as soon as this week. The market was further pressured after the U.S. issued a general license authorizing Iranian oil sales. The crude market sold off to a low of $74.45 by mid-day. The market later settled in a sideways trading range during the remainder of the session. The July WTI contract went off the board down $1.78 at $74.82, while the August WTI contract settled down $1.99 at $73.86 and the August Brent settled down $2.76 at $77.90. The product markets ended the session lower, with the heating oil market settling down 3.42 cents at $3.0931 and the RB market settling down 79 points at $2.9870.
Technical Analysis: The oil market will remain under pressure as long as talks between the U.S. and Iran continue to make progress and oil flows through the Strait of Hormuz continues. Any setbacks in talks will limit its losses. Also, one should note that supply recovery will remain challenging. Analysts estimate that 1 million to 2 million bpd of supply could be permanently or semi-permanently lost. The crude market, basis the August contract, is seen finding support at $73.24, $72.83, $70.17, $70.05 and $67.00. Meanwhile, resistance is seen at $78.14, $79.18, $80.01, $80.15, $81.00 to $81.68, $82.23 and $84.44.
Fundamental News: The U.S. Treasury Department authorized the production, delivery and sale of Iranian oil on Monday, a move promised under an agreement reached by Washington and Tehran last week. The general license, announced as the two sides continue talks aimed at reaching a final peace deal, allows the production, delivery and sale of crude oil and petrochemical and petroleum products of Iranian-origin through August 21st. Transactions authorized in Monday’s general license include importation of Iranian-origin crude oil, petrochemical and petroleum products to the United States. The license says Iranian oil can be imported into the United States under the waiver when necessary to complete its sale or delivery. It does not authorize transactions involving North Korea or Cuba, countries heavily sanctioned by the United States.
The state of California sued the U.S. Environmental Protection Agency on Monday after the agency sent the Republican-controlled Congress landmark state vehicle emissions rules for potential repeal. The EPA said waivers under the Clean Air Act for California environmental regulations approved under prior Democratic administrations should have been sent to lawmakers under the Congressional Review Act. California said the action was illegal and should be blocked by the U.S. District Court in Washington, arguing that the EPA was seeking to “wave a magic wand” and turn a waiver into a rule.
IIR Energy said U.S. oil refiners are expected to have shut in about 224,000 bpd of capacity for the week ending June 26th, increasing available refining capacity by 35,000 bpd. Offline capacity is expected to fall to 169,000 bpd in the week ending July 3rd.
Early Market Call – as of 8:40 AM EDT
WTI – Aug $73.36, down 72 cents
RBOB – July $2.9648, down 3.48 cents
HO – July $3.0698, down 3.57 cents
