Norway: Norway is a major producer of oil in Europe as well as it’s largest supplier of natural gas. There is more than 90 offshore fields. Per the Norwegian Offshore Directorate (NOD), even though values fell by around 20% during month, April saw crude oil output exceed forecast by 3.5% as it came in at 1.83 million barrels per day (bpd). Yet, this was just slightly below 1.84 million bpd produced in same month one year earlier.
Russia-Ukraine: Yesterday, Russian President Vladimir Putin had a call with President Trump which resulted in suggestion that Ukraine and Russia would start negotiations for a ceasefire. Yet, the Kremlin is also clear that the process will take time to complete. European leaders, after being briefed by the U.S. President, opted to increase pressure on Russia via sanctions. Mr. Trump was clear that he was not ready to join in with the fresh sanctions as wants to first give chance to get something done.
Iran-U.S. nuclear talks: Per Deputy Foreign Minister Kazem Gharibabadi, Iran is indicating they have received and are reviewing a proposal for a 5th round of nuclear talks with the United States. Recently, President Trump has indicated they need to move quickly with discussions. Yet, Iran’s Supreme Leader Ayatollah Ali Khamenei has suggested doubts that these negotiations will lead to an agreement. Analysts have indicated a deal would allow sanctions to ease and Iran would be able to raise exports by 300,000 to 400,000 bpd.
Market Overview: Prices are steadying today considering potential Russia-Ukraine peace talks along with increasing uncertainty over U.S.-Iran negotiations. The JUN25 WTI contract does expire today with JUL25 around $0.60 under the current front month so again is moving towards $60 level (May 8th was most recent settle below $60). Also, the American Petroleum Institute (API) will be providing weekly inventory data this afternoon and expectation is for crude and products to all show drawdowns.
Saudi Arabia crude production
The Organization of the Petroleum Exporting Countries and allies such as Russia (known as OPEC+) has agreed to increase crude production by nearly 1 million bpd in April, May, and June. In chart above, you can see Saudi Arabia’s crude oil production has been increasing from December through February and that is only going to continue as part of OPEC+ agreement with its June oil production quota being 9.367 million bpd. This has led analysts to cut oil price forecasts which has also resulted in indications that the country will burn much more crude oil for power generation during summer rather than high-sulphur fuel oil (HSFO) as it has become more costly. Air conditioning demand spikes in Middle East between June and August with HSFO and crude oil being burnt to generate power. The expectation of Saudi Arabia increasing burn of crude oil for power (to nearly 470,000 bpd) should aid in alleviating some of concern of global oversupply.
The market had minimal movement on the day as the JUN25 WTI crude contract expired as JUL25 will become the front month. For the session it was off $0.13 (to $62.56) and products showed small gains. ULSD distillates had a very minimal increase of $0.0012 (to $2.1289) while RBOB gasoline had biggest move during the day as advanced $0.0133 (to $2.1521). Traders will shift focus to weekly inventory reports as API's will be provided yet this afternoon (with drawdowns anticipated for both crude and products) while EIA will offer update tomorrow morning.