Recap: The oil market continued on its downward trend as the market weighed the prospects for a resumption of oil supplies through the Strait of Hormuz and few details on the interim deal to end the U.S.-Israeli war with Iran. The crude market traded sideways in overnight trading, posting a high of $81.58 before it breached the $80 level and continued to trend lower. The market extended its losses to over $5.20 as it breached a support line at $77.80 and sold off to a low of $75.52 in afternoon trading. The market was further pressured by The Wall Street Journal report stating that the U.S.-Iran deal allows Iran to immediately resume its oil sales once the agreement is signed this week. The oil market later retraced some of its losses ahead of the close. The July WTI contract settled down $4.70 at $76.05 and the August Brent contract settled down $4.21 at $78.96. The product markets ended the session lower, with the heating oil market settling down 9.63 cents at $3.1702 and the RB market settling down 6.67 cents at $2.8805.
Technical Analysis: The crude market may retrace some of its sharp losses amid warnings that shipping traffic and energy exports could take weeks to recover and details of the peace agreement have yet to be made public. The market will also remain cautious after Hezbollah said it does not believe Iran will sign the final agreement unless Israel withdraws from Lebanon. The market will also look to the weekly petroleum stocks reports for further direction. The market is expecting weekly inventory reports to show a draw of 4.5 million barrels for the week ending June 12th. The oil market is seen finding support at $75.66, $71.64, $71.50, $70.56, $69.14, $68.28, $67.76 to $66.84. Meanwhile, resistance is seen at $81.58, $82.42 to $83.20, $83.81, $86.33, $87.23, $88.85, $90.55 and $93.64.
Fundamental News:
Hezbollah said it believes Iran will not sign a final nuclear deal with Washington unless Israel withdraws from Lebanon, as Iran’s top diplomat said Israel’s continued troop presence in Lebanon would be considered a breach of the U.S.-Iran memorandum of understanding.
U.S. average retail gasoline prices fell below $4/gallon for the first time since mid-April, as optimism grew that a preliminary deal between the U.S. and Iran would lead to the reopening of the Strait of Hormuz. According to GasBuddy data, U.S. national average retail gasoline prices fell to $3.997/gallon on Sunday, though prices are still up 90.8 cents from the same time last year. National average prices were at $4.065 on Monday, according to motorist group American Automobile Association. As of Monday, Americans have collectively spent about $46 billion more on gasoline since the start of the war.
Goldman Sachs lowered its fourth-quarter Brent crude oil price forecast to $80/barrel from $90/barrel and cut its 2027 average estimate to $75/barrel from $80/barrel, after the U.S. and Iran signed a preliminary agreement to reopen the Strait of Hormuz. Analysts at the investment bank said they now assume that Gulf exports normalize to pre-war levels by the end of July versus the end of August expected previously. Goldman expects WTI to average $75/barrel in the last quarter this year and $70/barrel in 2027.
Morgan Stanley has lowered its Brent crude oil price forecast for the third quarter to $90/barrel from a previous forecast of $100/barrel. It also lowered its Brent crude price forecast for the fourth quarter of this year by $15/barrel to $80/barrel.
Barclays maintained its $100/barrel forecast for Brent crude in 2026. It said the timing of the restoration of navigation through the Strait of Hormuz could fall in line with its end of June baseline. It forecasts a small deficit in the third quarter.
Commerzbank maintained its Brent crude price forecast of $85/barrel for the end of this year. It said it does not expect Brent to return towards pre-war levels of around $65/barrel until next year.
Early Market Call – as of 9:35AM EDT
WTI – July $77.03, up 41 cents
RBOB – July $2.8845, down 1.28 cents
HO – July $3.2299, up 2.22 cents
