Recap: The oil market posted an inside trading day and settled higher on Wednesday as it recouped some of its sharp losses seen earlier this week. The market retraced some of its previous losses in overnight trading as the market reassessed the situation in the Middle East following the reports that the U.S. airstrikes did not destroy Iran’s nuclear capabilities. The market, which posted a low of $64.51 early in the session, traded to its high of $64.51 by mid-day in light of the EIA weekly petroleum stocks report showing relatively strong U.S. demand. The EIA reported draws across the board, with crude stocks falling by 5.8 million barrels on the week, compared with market expectation of a 797,000 barrel draw. Meanwhile, gasoline stocks unexpectedly fell by 2.1 million barrels, as demand increased to the highest level since December 2021. The market later settled in a sideways trading range ahead of the close. The August WTI contract ended the session up 55 cents at $64.92 and the August Brent contract settled up 54 cents at $67.68. The product markets ended the session mixed, with the heating oil market settling up 1.13 cents at $2.2964 and the RB market settling down 33 points at $2.0824.
Technical Analysis: The crude market is seen remaining within its recent trading range as the market keeps an eye on the situation in the Middle East. The market will remain supported by the draws reported in oil inventories. The oil market is seen finding support at its low of $64.51, $64.00, $63.54, $63.27 and $63.01, basis a trendline. Meanwhile, resistance is seen at its high of $66.03, $67.83, $69.14, $69.50, $71.20 and $72.90.
Fundamental News: According to a preliminary U.S. intelligence assessment, U.S. airstrikes did not destroy Iran’s nuclear capability and only set it back by a few months. On Tuesday, both Iran and Israel signaled that the air war between the two nations had ended, at least for now, after U.S. President Donald Trump publicly scolded them for violating a ceasefire he announced on Monday evening. Over the weekend, President Trump said that the U.S. deployment of 30,000-pound bombs had “obliterated” Iran’s nuclear program. However, that claim appeared to be contradicted by an initial assessment by one of his administration’s intelligence agencies.
On Wednesday ahead of meeting with world leaders at a NATO summit, U.S. President Donald Trump said that the damage to Iranian nuclear sites from missile strikes over the weekend was severe, though he also acknowledged that the available intelligence on the matter was inconclusive. . He later said Iran’s nuclear program has been put back decades.
Later, U.S. President Donald Trump said Washington would likely seek a commitment from Iran to end its nuclear ambitions at talks with Iranian officials next week. He said he did not see Iran getting involved again in developing nuclear weapons. President Trump also said that the U.S. has not given up its maximum pressure on Iran, including restrictions on sales of Iranian oil, but signaled a potential easing in enforcement to help the country rebuild. On Tuesday, President Trump said that China can continue to purchase Iranian oil after Israel and Iran agreed to a ceasefire, but the White House later clarified that his comments did not indicate a relaxation of U.S. sanctions.
IIR Energy reported that U.S. oil refiners are expected to shut in about 137,000 bpd of capacity in the week ending June 27th, increasing available refining capacity by 172,000 bpd. Offline capacity is expected to fall to 54,000 bpd in the week ending July 4th.
Early Market Call – as of 8:45 AM EDT
WTI – Aug $64.98, up 3 cents
RBOB – Jul $2.0916, up 89 points
HO – Jul $2.3269, up 2.46 cents
