July WTI crude oil (CLN25) today is down -0.26 (-0.35%), and July RBOB gasoline (RBN25) is up +0.0057 (+0.25%).
Crude oil and gasoline prices today are mixed, with gasoline posting a 10-1/4 month high. Today's weaker dollar is bullish for energy prices. Also, concern about the Israel-Iran conflict is bullish for crude after Bloomberg reported Thursday that US officials are preparing for a possible strike on Iran.
However, crude prices were undercut after President Trump said he would wait two weeks to give diplomacy a chance before deciding if the US should attack Iran. Crude prices were also pressured on signs that Iran is ready to negotiate after Reuters reported that the Iranian government is ready to discuss limitations on uranium enrichment.
So far, Iran has not impeded ship movement through the vital Strait of Hormuz, which handles about 20% of the world's daily crude shipments. However, a French naval liaison group stated that navigational signals from over 1,000 vessels a day moving through the Strait had been disrupted due to "extreme jamming" of signals from the Iranian port of Bandar Abbas, which led to a collision of two tankers on Tuesday near the Strait of Hormuz.
Oil prices continue to be undercut by tariff concerns after President Trump said last Wednesday that he intends to send letters to dozens of US trading partners within one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that came with his 90-day pause.
A decline in crude oil held worldwide on tankers is bullish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -7.2% w/w to 73.97 million bbl in the week ended June 13.
Concern about a global oil glut is negative for crude prices. On May 31, OPEC+ agreed to a 411,000 bpd crude production hike for July after raising output by the same amount for June. Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production. OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026. OPEC May crude production rose +200,000 bpd to 27.54 million bpd.
Wednesday's EIA report showed that (1) US crude oil inventories as of June 13 were -10.2% below the seasonal 5-year average, (2) gasoline inventories were -1.8% below the seasonal 5-year average, and (3) distillate inventories were -16.7% below the 5-year seasonal average. US crude oil production in the week ending June 14 was unchanged w/w at 13.431 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.
Baker Hughes reported last Friday that active US oil rigs in the week ending June 13 fell by -3 to a 3-3/4 year low of 439 rigs. Over the past 2-1/2 years, the number of US oil rigs has fallen from the 5-1/4 year high of 627 rigs posted in December 2022.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
