U.S. Labor Market: U.S. job openings rose by 191,000 in April to 7.391 million, but layoffs also jumped by 196,000, the biggest monthly increase in nine months, signaling a softening labor market amid trade policy uncertainty. The number of people quitting their jobs fell sharply, indicating declining confidence in the job market. Hiring increased modestly, led by construction and services, while layoffs were concentrated in small and mid-sized firms. Economists caution that continued tariff-related uncertainty could lead to weaker labor data in the coming months.

Canadian Wildfires: Widespread wildfires across Alberta, Saskatchewan, and Manitoba have shut in an estimated 350,000 bpd of Canadian oil production, with Cenovus declaring force majeure at its Christina Lake facility and halting 238,000 bpd. The fires are also pushing heavy smoke into the U.S. Upper Midwest, significantly impacting air quality in ag-heavy regions. Ely, MN hit a hazardous AQI of 336 Tuesday, while Minneapolis registered 168, ranking third globally. The smoke is expected to move east, affecting areas like New York and Philadelphia in the coming days. 

Market Overview: Oil prices are steady to start Wednesday as OPEC+’s planned 411,000 bpd output hike in July was counterbalanced by Canadian supply disruptions from wildfires, which have taken 344,000 bpd offline. Prices also found support from geopolitical risks, including Iran’s firm rejection of U.S. nuclear demands and continued tension surrounding Russian and Iranian exports. Meanwhile, global trade uncertainty intensified after the OECD cut its growth forecast and President Trump hinted at renewed tariff escalation with China. The market also awaits DOE inventory report later this morning, as APIs predict builds on products and declines on crude inventories. 

Refining margins climbed to their highest level in 14 months during May, supported by tight global fuel supplies, peak summer demand, and falling inventories. Despite crude oil prices sliding to multi-year lows, margins have remained strong as refinery closures in the U.S. and Europe, along with unplanned outages in Nigeria, Mexico, and Iberia, reduced available capacity. Gasoline and diesel supplies have both declined year over year, while inventories in major markets like the U.S., EU, and Singapore fell by 50 million barrels from January through May. Demand for transport fuels has proven resilient, with U.S. refiners reporting steady gasoline demand and year-over-year growth in diesel and jet fuel. The market has also benefited from stronger seasonal demand in the northern hemisphere, especially for air travel and motoring. However, analysts caution that the current strength may be short-lived, as rising output and ongoing trade tensions could pressure margins in the second half of 2025.

Oil prices fell roughly 1% on Wednesday, pressured by a bearish U.S. inventory report and rising OPEC+ supply. The EIA reported a large build in U.S. gasoline stocks (+5.2 million barrels) and distillates (+4.2 million barrels), both far exceeding forecasts and signaling weaker-than-expected post-Memorial Day demand. Crude inventories, however, declined by 4.3 million barrels amid increased refinery activity. Weighing further on sentiment were OPEC+ plans to raise output by 411,000 bpd in July and renewed trade tensions between the U.S. and China. The OECD also trimmed its global growth outlook, citing escalating tariffs, which could dampen future energy demand. Meanwhile, Canada began restarting wildfire-impacted oil sands production, easing some near-term supply disruption concerns.