Saudi Lowering Price: Saudi Arabia is expected to cut its July crude prices for Asian buyers to the lowest level in six months, following declines in benchmark prices due to rising OPEC+ supply. The official selling price for Arab Light crude may fall by 40 to 50 cents, bringing it to between 90 cents and $1 per barrel above the benchmark. Other Saudi grades, including Arab Extra Light, Medium, and Heavy, are also expected to see price cuts. These reductions come as OPEC+ boosts production and global economic concerns, including a U.S.-led tariff war, weigh on demand, leaving some crude cargoes unsold.
Trump Tariffs: The Court of International Trade blocked the tariffs the Trump administration imposed under the International Emergency Economic Powers Act (IEEPA). The ruling blocks 6.7pp of tariff increase since the start of the year, including the tariffs on Canada, China, Mexico, and the 10% baseline tariff, but does not affect sectoral tariffs. As the administration can impose an across-the-board tariff and country-specific tariffs under other legal authorities this ruling represents a setback for the administration's tariff plans and increases uncertainty but might not change the final outcome for most major U.S. trading partners.
API: On Wednesday, the API forecasted a crude inventory draw of 4.2 mmbbls for the week ended May 23rd, and a draw of 0.3 mmbbls at Cushing. Reuters forecasts a 0.1 mmbbls crude build to inventories. The API expects gasoline draws of 0.5 mmbbls, and distillate build of 1.3 mmbbls. Reuters expects a gasoline draw of 0.5 mmbbls and a distillate build of 1.3 mmbbls.
Market Overview: Oil prices are rising Thursday morning after a U.S. court blocked most of former President Trump's tariffs, easing concerns about global economic growth and boosting investor sentiment. Markets are also monitoring the potential impact of new U.S. sanctions on Russian crude and the upcoming OPEC+ decision on increasing oil output in July. Chevron halted operations in Venezuela following the revocation of a key license, further tightening global oil supply. Additionally, a wildfire in Alberta, Canada, disrupted some oil and gas production, contributing to supply concerns.
RBOB Gasoline
The June RBOB contract is starting Thursday out with small gains. Currently the contract is bunched up with its 200 day moving average (light blue) 30 day moving average (orange) and its 100 day moving average (purple). Looking at the RSI with a value of 48 would tell you the contract is neither over or under sold. As we head into driving season in the U.S. look to the gasoline demand numbers from today's DOE report to help give any indication on this years driving season.
Oil prices dropped over 1% on Thursday as markets reacted to a U.S. court ruling that blocked major Trump-era tariffs, though officials downplayed its broader impact. Investors remained cautious amid uncertainty over new U.S. sanctions on Russian crude and ongoing talks with Iran regarding its nuclear program. Weak oil demand in China and geopolitical developments in Russia and Iran added to market concerns. The upcoming OPEC+ meeting is expected to result in further production hikes, while U.S. inventory data showed an unexpected drawdown that slightly supported prices. Meanwhile, Chevron halted operations in Venezuela due to revoked licenses, and Canadian wildfires disrupted some oil output, contributing to supply risks.
