Multiple factors over the past 2 weeks of crude trading have resulted in a $4.00/bbl Hi/Lo price range. Increased oil demand forecasts, along with the existing sanctions on Iran’s exports, provided some upward support while inventory gains, OPEC+’s possible July output increase, and US President Trump’s new tariff threat aimed at the EU, all resulted in lower prices at week’s end.
NYMEX July WTI futures contracts have wavered between $60/bbl and $64/bbl for the past 10 trading sessions. Such consolidation indicates an uncertainty as to market direction. WTI’s High for the week was Wednesday’s $64.20/bbl which stopped just below the Upper-Bollinger Band limit. The Low was Friday’s $60.02. Brent North Sea crude, in similar fashion, had a High of $66.65 and a Low of $63.30 on Wednesday and Friday, respectively. Both grades are lower week-on-week while the Brent/WTI spread is currently ($3.20).
The US-Iran talks appear to have reached an impasse this week despite a more optimistic outlook last week. Iran is adamant about continuing its nuclear fuel enrichment program. The sanctions on Iranian oil exports are providing some support for crude prices although, minimal. Rumors of a pending Israeli attack on Iran spiked oil prices briefly on Wednesday but the rally was quickly subdued on news of across-the-board inventory builds in the US.
Citing a lack of progress in trade talks, President Trump is threatening the EU with new tariffs of up to 50% on imports. Equity markets fell on the news, dragging oil lower with them as his comments spurred a new round of macroeconomic concerns. Additionally, conflicting signals regarding Venezuela’s oil production are coming out of the administration. US Special Envoy Richard Grenell announced a 60-day extension for Chevron’s operating license while Secretary of State Marco Rubio stated the sanctions waiver will expire on May 27. On another note, the US has told the EU it does not support the further lowering of the price cap on Russian Urals to $50/bbl from the current $60/bbl level. India has been the largest importer of Russian crude.
Goldman Sachs analysts raised their global oil demand forecasts by 600,000 b/d this year and +400,000 in 2026. Meanwhile, OPEC+ will meet on June 1 to consider another output increase of 411,000k b/d beginning in July.
The National Oceanic and Atmospheric Administration issued its preliminary forecast for the upcoming US hurricane season, indicating 13-19 named storms, 6-10 to become hurricane force, with 3-5 of those resulting in major hurricanes. The annual hurricane season begins June 1 and ends Nov. 20.
The Energy Information Administration (EIA)’s Weekly Petroleum Status Report indicated that commercial crude oil inventories and refined products stocks both increased last week. The SPR gained 1.3 million bbl to 400.5 million bbl.
The Conference Board’s Leading Economic Indicator fell by 1.0% last month, the fifth monthly decline and the steepest drop since March 2023. Additionally, the Consumer Sentiment Index dropped to 50.8 in April. It was also the fifth-consecutive monthly drop and was the second-lowest reading on record. All 3 major US stock indexes have moved lower week-on-week mainly on the tariff threats against the EU and Apple. The USD was also lower but did not provide support for oil prices.
Oil, technical analysis