Russia's Oil Revenues Decline: Russia's oil and gas revenue dropped 35% year over year in May to 512.7 billion rubles ($6.55 billion), as lower global oil prices and sanctions continued to pressure the Kremlin’s finances. Revenue also declined 53% from April, prompting the finance ministry to cut its June forecast and raise the projected 2025 budget deficit to 1.7% of GDP. The steep drop in energy income, long a key source of federal funding, underscores Russia's growing fiscal challenges amid its ongoing military campaign in Ukraine. Russia has reportedly opposed recent OPEC+ output hikes, seeking higher prices to stabilize its budget.

Oil Activity Slows: Oil companies are pulling back on activity and trimming capital spending plans for the rest of the year due to rising costs and declining prices, according to the Federal Reserve's latest Beige Book. Oilfield service firms are struggling to pass along tariff-driven cost increases, with 90% doing so within 90 days. U.S. oil demand has held steady, though global demand has softened, and overall oilfield activity has slowed, with firms focusing on more economical regions like the Permian Basin. The Fed also noted broader economic uncertainty and a slight decline in manufacturing and overall economic activity since April.

Inventory Data: U.S. crude inventories fell by 4.3 million barrels last week as refiners ramped up activity ahead of the summer driving season, with utilization jumping to 93.4%. Despite this, gasoline and distillate stocks surged by 5.2 million and 4.2 million barrels respectively, as implied gasoline demand unexpectedly dropped post-Memorial Day. The build in fuel inventories raised demand concerns and pressured oil prices, with WTI erasing earlier gains to trade flat near $63.40. Rising crude imports and a stock increase at Cushing also contributed to market caution.

Market Overview: Oil prices stabilized Thursday after a 1% drop Wednesday, driven by a larger than expected build in U.S. gasoline and diesel inventories and Saudi Arabia’s move to cut July prices for Asian buyers. Weaker fuel demand in the U.S. and concerns about a potential oversupply from upcoming OPEC+ production increases continue to pressure the market. Canadian wildfires and broader geopolitical tensions are offering some support to prices. Traders are closely watching U.S. economic data and global trade developments for further direction.

U.S. renewable diesel and biodiesel production dropped sharply in Q1 2025 due to poor margins and uncertainty over new federal tax credit rules. Biodiesel output hit its lowest January level since 2015, while renewable diesel production also declined, despite recent capacity expansions. Major producers like Diamond Green Diesel and Phillips 66 reported losses, and many facilities idled amid unclear guidance on the new carbon intensity-based credit replacing the $1/gal blender’s tax credit. Output is expected to rise later in 2025 to meet RFS mandates, but annual biodiesel production is forecast to fall 15% below 2024 levels.

Oil prices rose on Thursday after news broke that the U.S. and China agreed to resume trade talks, easing fears of an escalating trade war. West Texas Intermediate crude settled up 52 cents at $63.37, recovering from losses driven by bearish inventory data earlier in the week. U.S. gasoline and distillate stocks posted large builds, signaling soft demand and putting a cap on stronger gains. Saudi Arabia also cut its July crude prices for Asia to a two-month low, reflecting ongoing concerns about oversupply as OPEC+ moves to boost production. Wildfires in Canada and geopolitical risk continue to lend underlying support to prices. Meanwhile, U.S. economic data painted a cautious picture, with rising jobless claims and a contraction in the services sector fueling uncertainty ahead of Friday’s jobs report.