OPEC+: The Organization of the Petroleum Exporting Countries and its allies (or OPEC+) has been in process of unwinding production cuts with additions already in place for May and June. Now, when the group meets on June 1st, discussions will be about a further production increase for July. No final agreement has been reached but a 411,000 barrels per day (bpd) increase for July is among the options under discussion. Plus, additionally, previous reports indicate that as much as 2.2 million bpd production could be brought back by November. These potential increases are certainly creating concern that global supply could exceed demand growth as the group appears to be more interested in improving market share rather than defending price.
Canadian crude: In April, for the first time ever, Canada exported more seaborne crude to China than it did to the U.S. For the month, seaborne exports to China were 299,000 barrels per day (bpd) and up from 277,000 bpd during previous month while the U.S. received 286,000 bpd which compares to 431,000 bpd just last September, which was a record. This emerging situation is a result of commodity markets adjusting to tariff threats (U.S. did eventually backed away from 10% tariff on Canadian energy imports) along with uncertainty of future actions by President Trump resulting in some limiting of exposure to U.S. In addition, there still is about 4 million bpd steadily being sent by pipeline from Canada to its southern neighbor but the discount on Western Canadian Select crude (to U.S. West Texas Intermediate) has narrowed to around $9 a barrel which is lowest in about 4 ½ years. For comparison, was not uncommon for it to be $20 or more in recent times and was nearly $30 in November.
EIA weekly inventory: Yesterday, the U.S. Energy Information Administration (EIA)provided its weekly inventory information which was full of rising inventory for both crude and products when the expectation was they’d all show drawdowns. Crude oil had a second consecutive week of gains as it showed a 1.3 million barrel build which brings total to 443.2 million barrels, yet, U.S. crude supplies are still about 6% below the five-year seasonal average. Distillate inventories added 600,000 barrels but the 104.1 million barrel total is 16% below the five-year average. Gasoline showed a 800,000 barrel gain when a 500,000 barrel draw was the anticipation. In addition, refinery utilization showed increase and was at 90.7% which marked a second consecutive week above 90% after not seeing that level since week to January 10th. Thus, huge spring refinery maintenance season is seeing significant progress.
Market Overview: Energy prices are falling more than 1% today as OPEC+ considers further oil production increases for July. The EIA report showed distillates demand to be lowest since early January as was 3.412 million bpd during week which was off by 365,000 bpd from prior week as wet weather slowed activity. Despite this, the ULSD distillates contract was able to stay positive yesterday and exports appear to be trending upward. It is above $2.10 currently but will it remain?
West Texas Intermediate (WTI) crude:

On January 15th, WTI crude settled at $80.04 which marks the highest settle for the contract during 2025 as well as the only session during the year that it ended above $80. Since then, there was a gradual decline (of more than $10) over next few months before first half of April saw kind of abrupt fall to $60 level (and below) before rebounding to around $64 on a couple occasions in May. Much of this fall can be attributed to concern about rising output (specifically from OPEC+) relative to fairly flat global demand. That $60 level is considered current support level and contract is again nearing it as further OPEC+ production increases are being mentioned. The last settle below $60 was on May 8th.

The market began the day down more than 2% as concern about OPEC+ considering further production increases for July weighed on traders as that seems likely to result in global supply outpacing demand growth. Yet, values did move slightly higher as the day progressed with Chevron's licensing to operate in Venezuela set to expire on May 27th, per Secretary of State Marco Rubio. At the settle, crude and products ended with losses but all by 1% or less. West Texas Intermediate (WTI) crude was off $0.37 (to $61.20) while RBOB gasoline was down $0.0186 (to $2.1312) and ULSD distillates were off $0.0216 (to $2.1175).
