Recap: The crude market, which posted an inside trading day, traded higher for a third consecutive day on Friday. However, the market settled down 11.27% on the week after the Israel-Iran ceasefire caused prices to fall sharply earlier in the week. The oil market rebounded from some selling seen on Thursday afternoon and rallied to a high of $66.09 by mid-day. However, the market once again erased its gains and sold off sharply to a low of $64.80 in afternoon trading on the easing geopolitical risk. The market was further pressured in light of OPEC+ sources stating that OPEC+ is likely to increase output by another 411,000 bpd for August when the eight members meet on July 6th. The market later bounced off its low and settled in a sideways trading range during the remainder of the session. The August WTI contract settled up 28 cents at $65.52 and the August Brent settled up 4 cents at $67.77. The product markets ended the session lower, with the heating oil market settling down 5.29 cents at $2.3072 and the RB market settling down 92 points at $2.0898.
Technical Analysis: The crude market will continue to trend sideways on Friday as the market holds its support at its recent lows. The market may have been a bit oversold once the energy infrastructure risk seemed to be off the table and the market focused on concerns about oversupply. The oil market is seen finding support at $64.80, $64.66, $64.51, $64.00 followed by $63.54-$63.51 and $63.40. Meanwhile, resistance is seen at $66.09, $66.42, $67.83, $69.50, $71.20 and $72.90.
Fundamental News: The U.S. Department of Energy said the U.S. will not complete scheduled deliveries of crude oil into the Strategic Petroleum Reserve until the end of the year due to site maintenance, as much as seven months behind schedule.
Four OPEC+ delegates said OPEC+ is set to make another big increase of 411,000 bpd for August as it looks to regain market share. If the increase is agreed, it would bring the total rise in supply from OPEC+ to 1.78 million bpd so far this year, equivalent to over 1.5% of total global demand. The group has not yet increased production by the volumes agreed because some members are compensating for previous overproduction and others need longer to bring output back online.
Baker Hughes said U.S. energy firms cut the number of oil and natural gas rigs operating for a fourth consecutive month to the lowest level since October 2021. The oil and gas rig count fell by seven to 547 in the week ending June 27th. Baker Hughes said oil rigs fell by six to 432 this week, also their lowest since October 2021, while gas rigs decreased by two to 109.
IIR Energy said U.S. oil refiners are expected to shut about 146,000 bpd of capacity in the week ending June 27th, increasing available refining capacity by 163,000 bpd. Offline capacity is expected to fall to 113,000 bpd in the week ending July 4th and to 104,000 in the week ending July 11th.
Goldman Sachs’ scenario analysis suggests Brent at $90/ barrel by year-end in case of an interruption of trade through the Strait of Hormuz. It said the option markets see a 60% chance that Brent will stay in the $60s in 3 months and a 28% probability that Brent prices exceed $70/barrel.
U.S. President Donald Trump said the U.S. is immediately ending trade talks with Canada in response to the country’s digital services tax on technology companies.
Early Market Call – as of 8:25 AM EDT
WTI – Aug $65.34, up 27 cents
RBOB – Jul $2.0868, up 68 points
HO – Jul $2.3129, up 1.92 cents
