Recap: The crude market on Friday posted an outside trading day as the market weighed reports of oil transiting through the Gulf, with no reports of any new U.S. attacks on Iran overnight between Thursday and Friday following a sharp escalation earlier in the week. The oil market traded lower in overnight trading, posting a low of $81.06 amid reports that more vessels transited the Bab el-Mandeb Strait on Thursday and two large crude tankers carrying oil loaded in the Gulf exited the Strait of Hormuz on Friday. However, the market bounced off its low and rallied higher following reports that Iran had stopped two vessels seeking to exit the Strait of Hormuz and four vessels turned back. The market traded to a high of $86.45 and later settled in a sideways trading range during the remainder of the session. The September WTI contract settled up $1.08 at $84.67 and the September Brent contract settled up $1.09 at $90.12. The product markets ended the session lower, with the heating oil market settling down 8.79 cents at $4.1215 and the RB market settling down 6.31 cents at $3.2216.
Technical Analysis: The oil market, which traded on the shipping data on Friday, will look to the updated data over the weekend for further direction. The market will also look to any news regarding the continuing talks between Iran and Oman on managing the Strait of Hormuz and Saudi Arabia’s proposed coalition to increase defense cooperation in the Bab el-Mandeb Strait, the Red Sea and the Gulf of Aden. The crude market is seen finding resistance at $86.45 to $87.68 followed by $92.83 and $93.50. Meanwhile, support is seen at $82.31, $81.06, $79.92, $77.78, $77.39, $77.20, $72.51 and $70.68.
Fundamental News: The EIA reported that U.S. crude oil production in May fell by 253,000 bpd on the month to 13.714 million bpd. U.S. crude oil exports increased by 135,000 bpd on the month to 5.728 million bpd in May and total refined oil product exports fell by 30,000 bpd to 3.537 million bpd. The EIA reported that total oil demand in May fell by 1.2% or 252,000 bpd on the year to 20.071 million bpd. U.S. distillate demand in May fell by 5.9% or 222,000 bpd on the year to 3.567 million bpd and U.S. gasoline demand fell by 4.1% or 375,000 bpd on the year to 8.682 million bpd.
Baker Hughes reported that U.S. energy firms added rigs for a sixth time in seven weeks. The total oil and gas rig count increased by one to 588 in the week ending July 31st. Baker Hughes said oil rigs increased by one to 451 this week, their highest level since mid-July, while gas rigs held at 127 and other miscellaneous rigs held at 10.
Bloomberg reported that U.S. refiners running at full capacity to meet a global fuel shortage posted some of their most profitable quarters ever, as years of domestic plant closures and wars tightened supplies worldwide. Valero Energy Corp. reported its most profitable quarter on record as measured by earnings per share, while PBF Energy Inc. and HF Sinclair Corp. reported the best profits since 2022 and 2023, respectively.
Chevron said turnarounds and downtime were expected to reduce its upstream production by 150,000 to 200,000 bpd of oil equivalent in the third quarter. Chevron reported production totaled 4 million bpd of oil equivalent during the second quarter, up from 3.85 million bpd of oil equivalent in the first quarter. U.S. output, focused on the Permian Basin and offshore Gulf region, hit a new record of 2.08 million bpd of oil equivalent.
Early Market Call – as of 9:00 AM EDT
WTI – Sep $78.66, down $8.13
RBOB – Aug $2.9918, down 17.95 cents
HO – Aug $3.9471, down 24.61 cents
