Recap: The crude market traded higher on Wednesday in light of the continuing impasse between the U.S. and Iran over a U.S. proposal to end the war, cutting hopes of an end to the war in Iran. On Monday, U.S. President Donald Trump said that the ceasefire was on “life support”, amid disagreements over Iran’s demands of a cessation of hostilities on all fronts, the removal of a U.S. naval blockade, the resumption of Iranian oil sales and compensation for war damage. Iran also emphasized its sovereignty over the Strait of Hormuz. The market posted a low of $98.00 in overnight trading. However, the oil market bounced off that level as it remained well supported and retraced more 62% of its move from a high of $110.93 to a low of $88.66, posting a high of $102.66 ahead of the close. The June WTI contract settled up $4.11 at $102.18 and continued to trend higher in the post settlement period, posting a new high of $102.72. The July Brent contract settled up $3.56 at $107.77. The product markets ended the session higher, with the heating oil market settling up 19.02 cents at $4.1588 and the RB market settling up 9.79 cents at $3.6977.
Technical Analysis: The oil market, which breached last Wednesday’s trading range, will remain supported by the oil inventory draws expected across the board in the latest weekly petroleum stocks report due out on Wednesday morning. The market will also remain supported amid the ongoing impasse between the U.S and Iran. However, it is unlikely that there will be any major change or announcements ahead of President Donald Trump’s arrival in Beijing on Wednesday for his meeting with China’s President Xi Jinping on Thursday and Friday. The crude market is seen finding resistance at $102.72, $105.48, $107.46 and $110.93. Meanwhile, support is seen at $98.00, $96.13, $93.82, $89.85, $88.66.
Fundamental News: The Trump administration said it will loan energy companies 53.3 million barrels of crude from the U.S. Strategic Petroleum Reserve. The Department of Energy last month offered up to 92.5 million barrels from the reserve.
The U.S. Department of Energy’s Energy Information Administration said it assumes that the Strait of Hormuz will be effectively shut through late May and traffic will resume gradually from next month, prompting the agency to increase its forecasts for U.S. motor fuel prices. The EIA now expects U.S. retail gasoline prices to average $3.88/gallon this year, about 18 cents more than its prior forecast issued in April. The EIA said traffic through the Strait of Hormuz, which prior to the war amounted to a fifth of global oil supplies, is not expected to return to pre-conflict levels until later this year. The EIA said about 10.5 million bpd of crude oil output was shut in during April collectively from Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain. It said global oil inventories are set to fall by an average of 8.5 million bpd in the ongoing second quarter, keeping Brent crude oil prices near $106/barrel in May and June. The EIA sees 2026 Brent crude averaging $94.85/barrel, down from a previous forecast of $96/barrel, while Brent crude is forecast to average $79.39/barrel in 2027, up from a previous forecast of $76.09/barrel. The price of WTI crude in 2026 is forecast at $85.68/barrel, down from a previous forecast of $87.41/barrel and the price of WTI crude in 2027 is forecast at $74.39/barrel, up from a previous forecast of $72.43/barrel. The EIA forecast U.S. oil output in 2026 at 13.65 million bpd, up 140,000 bpd from a previous forecast and an increase in output of 450,000 bpd in 2027 to 14.1 million bpd, up 150,000 bpd from a previous estimate. U.S. oil demand is forecast to total 20.7 million bpd, up 100,000 bpd from a previous estimate, while demand in 2027 is expected to remain unchanged at 20.7 million bpd.
Early Market Call – as of 8:25 AM EDT
WTI – June $102.22, up 17 cents
RBOB – June $3.6764, down 10 points
HO – June $4.1335, up 26 points
