Recap: The crude market ended a four-day losing streak and ended Thursday’s session 2.3% higher after a cargo ship was hit by an unknown projectile near Oman, renewing concerns over how long it could take for oil supplies from the Gulf to resume normal levels. The oil market continued to trend lower during the overnight trading hours and posted a low of $68.90. However, the market bounced off its low and retraced its losses following reports that Iran fired on a cargo ship near the Strait of Hormuz. Before the incident, U.S. Secretary of State Marco Rubio stated that there would be a problem if Iran threatened or blocked ships in the Strait of Hormuz. Iran has signaled it would continue to assert control over the strait, with the Revolutionary Guards stating on Thursday that safe passage through the strait would only be possible through routes designated by Iran, adding that it would take action against vessels that failed to comply. The market was further supported and rallied to a high of $72.50 ahead of the close as the U.N.’s International Maritime Organization paused its program to shepherd ships and seafarers through the Strait of Hormuz. The August WTI contract settled up $1.58 at $71.92 and the August Brent contract settled up $1.52 at $75.26. The product markets were also well supported, with the heating oil market settling up 12.2 cents at $3.2982 and the RB market settling up 14.55 cents at $3.0273.
Technical Analysis: The oil market will remain headline driven as it weighs concerns over the extent of Iran’s control over the Strait of Hormuz and its impact on the flow of oil from the Gulf. It will have to be seen whether Iran’s continued assertion of control over the waterway will derail the progress made so far after the signing of the peace agreement between the U.S. and Iran. The crude market is seen finding resistance at $72.50, $73.18, $74.45, $78.14, $79.18, $80.15 and $81.00 to $81.68. Meanwhile, support is seen at $68.90, $67.50, $66.96, $63.86 and $63.16.
Fundamental News: Crude shipments through the Strait of Hormuz increased this week to their highest level since the U.S.-Israeli conflict with Iran began in February after a ceasefire deal reopened the waterway. Still, while there was an increase in oil shipments amid strong demand, especially in Asia after months of disruptions, overall sailings are still a fraction of the daily average of 125 ships passing through the strait before the February 28th conflict began. According to analysis from Kpler, four tankers carrying six million barrels of crude oil sailed through the strait on Thursday and an additional four million barrels of Iranian crude onboard two separate tankers also left. On Wednesday, some 10.8 million barrels of oil were shipped out on six tankers.
Chevron’s Chief Financial Officer, Eimear Bonner, said that the oil major expects U.S. gasoline prices to fall as the Middle East situation continues to normalize. Her comments come shortly after U.S. President Donald Trump ordered an investigation into Big Oil, accusing them of “gouging” consumers by failing to lower gasoline prices in line with the recent decline in crude prices.
UBS cut its Brent oil price forecasts, lowering its targets to $85/barrel for the end of September and December, and $80/barrel for the end of March and June 2027.
Operations at Marathon Petroleum’s 631,000 bpd Galveston Bay refinery in Texas City, Texas refinery were normal on Thursday following a brief fire in a power plant and a unit upset earlier in the week.
Monroe Energy LLC, which is owned by Delta Air Lines, said a fire broke out in a process unit pump room at its 185,000 bpd Trainer refinery in Pennsylvania. The company said the cause of the incident would be investigated.
Early Market Call – as of 8:30 AM EDT
WTI – July $69.72, down $1.75
RBOB – July $2.9550, down 5.18 cents
HO – July $3.2301, down 5.52 cents
