Recap: The oil market on Friday remained supported by an IEA forecast of a tight prompt market and possible further sanctions on Russia. The market posted a low of $66.50 in overnight trading before it retraced its losses and traded back over the $67.00 level. The market was supported by an IEA report stating that the global oil market may be tighter than it appears, although it also forecast supply growth this year and cut its outlook for growth in demand, implying a market in surplus. The market was further buoyed by Russia’s Deputy Prime Minister stating that Russia will compensate for overproduction against its OPEC+ quota this year in August-September. Also, President Donald Trump on Thursday said he plans to make a major statement on Russia on Monday, leaving the market concerned over the potential for further sanctions imposed against Russia. The August WTI contract rallied to a high of $68.62 ahead of the close and settled up $1.88 at $68.45. The September Brent contract settled up $1.72 at $70.36. Meanwhile, the product markets ended the session higher, with the heating oil market settling up 6.39 cents at $2.4474 and the RB market settling up 3.46 cents at $2.1870.
Technical Analysis: The crude market will likely continue to trend higher, within its recent trading range, as the market remains supported by the possibility of the Trump administration imposing sanctions against Russia, with President Trump expected to make an announcement on Russia on Monday. The market will also continue to weigh the impact of the tariffs and the possibility of OPEC+ discussing a pause in output increases in October. It will also look for updates regarding Saudi Arabia’s oil production in June in the OPEC report on Tuesday after the IEA reported that the country increased its output in June over its OPEC+ target. Resistance is seen at its highs of $68.62-$68.65, $68.94, $69.50, $71.20 and $72.90. Meanwhile, support is seen at its low of $66.50, $66.45, $65.46, $65.40, $65.23, $64.67, $64.50 and $64.00.
Fundamental News: The U.S. Energy Department said it would provide up to 1 billion barrels of crude oil from the Strategic Petroleum Reserve to help support ExxonMobil’s efforts to restore refinery operations as part of an SPR exchange.
U.S. President Donald Trump announced the U.S. would impose a 35% tariff on Canadian imports next month and planned to impose blanket tariffs of 15% or 20% on most other trading partners. In a post on X late on Thursday, Canadian Prime Minister Carney said his government will continue to defend Canadian workers and businesses in their negotiations with the U.S. as they work towards that deadline.
The International Energy Agency said the world oil market may be tighter than it appears despite a supply and demand balance pointing to a surplus, as refineries increasing their processing rates to meet summer travel demand. The IEA expects global supply to increase by 2.1 million bpd this year, up 300,000 bpd from the previous forecast. World demand will increase by just 700,000 bpd, down from a previous forecast of 720,000 bpd, implying a sizeable surplus.
The IEA reported that Saudi Arabia’s crude output increased by 700,000 bpd in June to 9.8 million bpd, the highest level in two years. The increase in production comes as the IEA sees Saudi Arabia’s exports increasing by 500,000 bpd in June, more than the 440,000 bpd seen in tanker tracking data compiled by Bloomberg. In addition the IEA said refinery runs in the country also increased by 300,000 bpd from May.
Saudi Arabia’s Energy Ministry said the country has been fully compliant with its voluntary OPEC+ output target, adding that Saudi marketed crude supply in June was 9.352 million bpd, in line with the agreed quota.
Early Market Call – as of 8:55 AM EDT
WTI – Aug $69.18, up 43 cents
RBOB – Aug $2.1958, up 32 points
HO – Aug $2.4555, down 1.05 cents
