August WTI crude oil (CLQ25) Friday closed up +0.28 (+0.43%), and August RBOB gasoline (RBQ25) closed down -1.04 (-0.50%).
Crude oil and gasoline prices settled mixed on Friday. Crude found support on signs of easing trade tensions as the US moves closer to trade deals with China and other trading partners. Also, uncertainty over Iran gave crude prices a boost after US Energy Secretary Wright said that sanctions against Iran will remain in place for now. In addition, Friday’s rally in the S&P 500 to a new record high shows confidence in the economic outlook, which is supportive of energy demand and crude prices. Gains in crude oil were limited, and gasoline prices fell due to a stronger dollar. Also, the crude crack spread Friday slid to a 1-1/2 week low, discouraging refiners from buying crude and refining it into gasoline and distillates.
Crude prices rose Friday after US Commerce Secretary Lutnick said that the US and China had finalized a trade understanding reached last month in Geneva. Also, Commerce Secretary Lutnick said the White House has imminent plans to reach agreements with a set of 10 major trading partners ahead of a July 9 deadline for reciprocal tariffs.
Crude oil prices have underlying support from US and European intelligence reports suggesting that Iran may still have most of its stockpile of 60% enriched uranium even after the Israeli and US bombing runs, which means that sanctions will likely remain in place until Iran agrees to nuclear inspections. On Friday, President Trump said he considered easing sanctions on Iran after a ceasefire, but would instead keep sanctions in place after Iran’s Supreme Leader, Ali Khamenei, claimed victory in the war with Israel.
Concern about a global oil glut is negative for crude prices. On Wednesday, Russia stated that it is open to another output hike for OPEC+ crude production in August, when the group meets on July 6. 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.
Gasoline prices have support from the American Automobile Association (AAA) projection that a record 61.6 million people will travel by car this Fourth of July holiday (June 28 to July 6), up +2.2% from last year and a sign of stronger gasoline demand.
Oil prices continue to be undercut by tariff concerns, as President Trump recently stated 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 followed 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 -13% w/w to 79.66 million bbl in the week ended June 20.
Wednesday’s EIA report showed that (1) US crude oil inventories as of June 20 were -10.9% below the seasonal 5-year average, (2) gasoline inventories were -2.8% below the seasonal 5-year average, and (3) distillate inventories were -20.3% below the 5-year seasonal average. US crude oil production in the week ending June 20 was unchanged w/w at 13.435 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 27 fell by -6 to a 3-3/4 year low of 432 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.
