Recap: The oil market continued to trend lower on Friday and fell to its lowest level in almost two months as U.S. and Iranian officials said they were close to an agreement to halt their war in the Middle East. A source said a memorandum between the U.S. and Iran to the war could be signed as soon as Sunday, with Geneva emerging as the likeliest venue. The market sold off to a low of $83.20 in overnight trading after U.S. President Donald Trump on Thursday reversed course and cancelled new strikes on Iran hours before they were expected to occur. The market bounced off its low and retraced some of its losses. It quickly rallied to a high of $87.23 after President Trump said Iran’s leaked comments on a deal with the U.S. do not represent what has been agreed to. However, the market erased some of its gains and traded within a range from about $84 to $85 during the remainder of the session as the market waits to see whether an agreement between the U.S. and Iran will be signed. The July WTI contract settled down $2.83 at $84.88 and the August Brent contract settled down $2.83 at $87.33. The product markets ended the session lower, with the heating oil market settling down 10.87 cents at $3.4044 and the RB market settling down 5.16 cents at $3.0498.
Technical Analysis: The crude market will remain driven by the latest headlines regarding the peace deal between the U.S. and Iran. A senior U.S. administration official said a text was in place that both sides like, while Iran’s Foreign Ministry spokesperson said Iran’s decision-making bodies were meeting to discuss the memorandum. The market will wait to see whether a final agreement is signed over the weekend. The oil market is seen finding support at $83.20, $82.52 to $82.46, $77.22 and $75.95. Meanwhile, resistance is seen at $87.23, $88.47, $90.10, $91.73, $93.64, $95.47, $95.91 and $97.00.
Fundamental News: Goldman Sachs lowered its 2027 average Brent oil price forecast to $80/barrel, compared to a previous forecast of $85/barrel, citing higher supply and lower demand in the oil market. The bank also maintained its Brent oil price forecast of $90/barrel for the fourth quarter of 2026, noting that the impact of a longer disruption in the Strait of Hormuz has so far been offset by a smaller-than-expected supply shortfall. Goldman Sachs also projected that exports through the Strait of Hormuz will normalize by late August, later than its previous estimate of end-June.
The gasoline market currently in the peak summer driving season is facing a supply crunch, with resilient domestic demand and increasing fuel exports threatening to strain thin inventories and send pump prices higher. Increasing summer demand from American motorists has not stopped U.S. refiners from increasingly prioritizing lucrative diesel and jet fuel production to backfill global shortages caused by shipping disruptions at the Strait of Hormuz. Analysts warn that a supply deficit is looming as U.S. gasoline demand has remained strong despite U.S. pump prices having increased about 40% since the war started, hovering above $4. Also, some analysts are worried that U.S. refineries may not be able to keep running close to capacity, noting that there have been more unplanned outages than expected lately. The U.S. gasoline supply cushion built during the low-demand winter months had evaporated by the end of May, when summer driving season started during the three-day Memorial Day holiday weekend. According to EIA data, in the first week of June, gasoline inventories fell to their lowest seasonal level in a decade, just 215.1 million barrels. Inventories have declined by more than 34 million barrels since the war started. Meanwhile, distillate fuel oil stocks fell to a 23-year low in May, leaving the supply highly vulnerable to any more sudden shocks. With domestic gasoline demand holding up in the face of high pump prices and exports remaining strong, analysts warn that total demand for U.S.-produced fuel could reach 9.5 million bpd this summer, which would surpass the 9.2 million bpd that fuel makers are currently capable of producing.
Early Market Call – as of 8:45 AM EDT
WTI – July $80.18, down $4.11
RBOB – July $3.9425, down 9.97 cents
HO – July $3.2872, down 10.97 cents
