Recap: The crude market on Friday eased further following the gains seen earlier in the week as the market weighs the recent escalation in hostilities between the U.S. and Iran. The market posted the day’s trading range by mid-day, posting a high of $73.16 and quickly selling off to a low of $70.77 as U.S. President Donald Trump said that Iran had asked to continue peace negotiations and that the U.S. had agreed but added that the ceasefire deal signed in June was “over”. Qatari negotiators were meeting officials in Iran on Friday, seeking to de-escalate tensions and to discuss navigation through the Strait of Hormuz. The oil market later settled in a sideways trading range during the remainder of the session. The August WTI contract ended the session down 67 cents at $71.41 and the September Brent contract settled down 29 cents at $76.01. The product markets settled in negative territory, with the heating oil market settling down 1.83 cents at $3.5533 and the RB market settling down 5.41 cents at $2.9846.
Technical Analysis: While prices have fallen, there is still substantial risk premium as transit through the Strait of Hormuz is back to a near standstill, with no clear sign of when normal crude flows through the waterway will resume. The oil market will wait to see if the situation de-escalates and whether talks between the U.S. and Iran do move forward. The crude market is seen finding support at $70.77, $70.49, $68.58, $67.82 and $67.04. Meanwhile, resistance is seen at $73.16, $75.13, $76.08, $78.14, $79.18, $80.15 and $81.00 to $81.68.
Fundamental News: The IEA said a recent escalation of hostilities between the U.S. and Iran could upend its forecast of a significant oil market surplus next year, as global supply increased in June when the Strait of Hormuz reopened but still lagged pre-war levels. The IEA said global oil supply increased by 4.1 million bpd in June, but remained 9.4 million bpd below pre-war levels. The agency predicts supply will increase by 7.5 million bpd next year after a 3.7 million bpd contraction this year, but that is contingent on improved Hormuz transits. The IEA’s 2027 forecasts imply that supply will outweigh demand by 4.62 million bpd next year from an 860,000 bpd deficit this year, provided producers can restart fields and refiners can resume normal product shipments. The IEA sees global oil demand falling by 1 million bpd this year, compared with a previous forecast of 1.1 million bpd, before rebounding to increase by 2 million bpd in 2027. In the nearer term, it sees the peak summer fuel demand season lifting consumption by around 8 million bpd when compared with May’s low point at the peak of the crisis. The IEA noted that margins that oil refineries make from producing gasoline, diesel and jet fuel increased to the highest level since 2022 in early July. The Iran war has caused a loss of refining capacity in the Persian Gulf region and curtailed fuel making elsewhere as refineries were not able to obtain the crude needed. The IEA warned that while crude oil supply has increased since the signing of an interim deal, product and liquefied petroleum gas exports from the Gulf remain constrained. It said the refined products markets remain exceptionally tight.
Baker Hughes reported that U.S. energy firms this week added rigs for a fourth consecutive week for the first time since early June. The total oil and gas rig count increased by one to 581 in the week ending July 10th, its highest level since May 2025. Baker Hughes said oil rigs held steady at 445 and gas rigs held at 126 this week, while other miscellaneous rigs increased by one to 10.
IIR Energy said U.S. oil refiners are expected to shut in about 270,000 bpd of capacity in the week ending July 10th, increasing available refining capacity by 125,000 bpd.
Early Market Call – as of 8:45 AM EDT
WTI – Aug $74.37, up $2.86
RBOB – Aug $3.0782, up 9.24 cents
HO – Aug $3.6973, up 16.34 cents
