The June WTI (CLM25) contract settled at 58.29 (-0.95) [-1.60%], high of 59.87, low of 57.74. Cash price is 59.24 (+1.04). Open interest for CLM25 is 297,188. CLM25 settled below its 5 day (59.69), below its 20 day (61.19), below its 50 day (65.22), below its 100 day (68.04), below its 200 day (68.65) and below its year-to date (67.92) moving averages. 

The July Brent Crude (QAN25) contract settled at 61.29 (-0.84) [-1.35%], high of 62.72, low of 60.70. Cash price is 62.12 (+1.07). QAN25 settled below its 5 day (62.58), below its 20 day (64.21), below its 50 day (68.30), below its 100 day (71.12), below its 200 day (72.24) and below its year-to-date (70.96) moving averages.

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OPEC+ is reportedly considering accelerating output hikes in June, potentially as much as 400,000 barrels per day. OPEC’s oil production recently fell by 200,000 bpd in April to 27.24 million bpd, according to a Bloomberg survey released Thursday. Half of that decline came from Venezuela, where oil exports plunged nearly 20% from March, dropping to just 700,000 bpd, the lowest in nine months. Elsewhere, the UAE cut production by 80,000 bpd and Saudi Arabia added only 20,000 bpd, coming in below its new quota level. Both Iraq and the UAE have continued to exceed their targets. According to five anonymous sources cited by Reuters, Saudi officials have told allies they’re done trying to prop up oil prices and are prepared to live with lower revenues. OPEC+ members are scheduled to meet on next Monday, May 5th, to finalize their output plan for June. Eight members of OPEC+ previously agreed to raise oil production by 411,000 barrels per day starting in May. 

US crude oil production saw a modest increase in February, according to data released Wednesday by the US Energy Information Administration. US production rose to 13.16 million barrels per day, an increase of 29,000 bdp from January.

US President Donald Trump declared that all purchases of Iranian oil or petrochemical products must cease immediately. He warned that any country continuing such transactions would face secondary sanctions. “They will be completely barred from doing business with the United States in any capacity,” Trump said in a post on Truth Social. China’s imports from Iran were estimated by commodity analysts at Kpler to be 1.71 million bpd in March, a 20% increase from February’s 1.43 million bpd, and the highest level in five-months.

The US economy shrank by 0.3% in the first quarter of 2025, marking its first contraction since 2022, according to preliminary data released Wednesday by the Commerce Department. Economists had forecasted a 0.4% GDP growth for the first quarter of 2025, down from the 2.4% increase recorded in the fourth quarter of 2024.

As trade talks continue between India and the US, Indian refineries have secured their largest purchase of US crude since August 2024, with around 11.2 million barrels set to arrive in June, according to Kpler data. India’s oil imports recently saw a 60% surge from February to March.

China's leading economic officials stated that the country could manage without American energy imports. Zhao Chenxin, vice chairman of the National Development and Reform Commission, said that domestic production of energy, along with imports from non-US sources, would be sufficient to meet demand. Zhao noted there would be limited impact on China’s energy supplies if companies stopped importing American oil, natural gas and coal. Last week, White House officials indicated that tariffs on China could be reduced to between 50% and 65%, though no specific timeline was provided. Despite US claims, China has repeatedly stated there are no tariff talks underway between the Trump and Xi administrations.China’s factory activity slowed in April, with Beijing citing global economic volatility as trade tensions with the U.S. intensified. Official data showed the manufacturing PMI fell to 49.0 the lowest since December 2023.

The World Bank published its Commodity Markets Outlook report, predicting that global trade disruptions will lead to a 12% drop in commodity prices in 2025, followed by an additional 5% decline in 2026. The report also forecasts a 17% decrease in energy prices, bringing them to their lowest point in five-years, with another 6% drop expected in 2026.

The Baker Hughes Rig Count, as of May 2, showed US oil rigs decreased by 4, to a total of 479 oil rigs.

The US Energy Information Administration data for the week ending April 4, showed US crude oil inventories had a draw of -2.7 million barrels from the previous week, a large discrepancy from the API’s forecast of a +3.76 mb build. Total US crude oil inventories stand at 440.4 million barrels, seasonally about 6% lower than the seasonal five-year average. Gasoline inventories had a draw of 4 million barrels. Distalties increased by 900,000 barrels.  US oil imports declined by 90,000 barrels per day, averaging 5.5 million bpd. Domestic oil production increased, averaging 13.465 million bdp. The US Strategic Petroleum Reserve increased by +1 million barrels. 

Price Thoughts -  Crude has been heavily influenced by the broader tariff headlines over the past month, and in turn global recession fears, which in my opinion is here to stay until some stability becomes priced in. Oil prices have also come under pressure from the OPEC rumor that members will propose further reducing their output cuts in June. Crude futures may continue to trade in their near-term range of $59-$63 for WTI and $61-$67 for Brent until bullish headlines generate, as the tighter supply/demand situation has taken a backseat to the macroeconomic picture. As I always say, this market is currently heavily influenced by the headlines first and foremost, and the weekly US EIA reports to a lesser degree. 

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Jim Rinaudo

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