OPEC+: OPEC+ may consider increasing oil output for July beyond the 411,000 barrels per day (bpd) hikes seen in May and June, according to sources familiar with the talks. Eight member countries have already been ramping up production faster than planned, a move that has pressured prices and drawn strategic responses from Saudi Arabia and Russia. While a 411,000 bpd increase is one option, some delegates suggest a larger hike may be discussed at Saturday’s meeting. Kazakhstan's refusal to cut output has added tension within the group and could influence the push for greater increases.
North Dakota: North Dakota has extended the timeframe for oil producers to complete drilled wells, aiming to support the industry amid weak oil prices. Previously, producers had one year to either complete or plug wells, but the new policy allows extensions until spring 2027, with quarterly pressure monitoring. The move responds to U.S. crude prices hovering around $60 per barrel—below the $65 many companies need for profitability—prompting plans to reduce rigs and delay completions. State officials hope the extension will help operators sustain activity levels despite the challenging pricing environment.
U.S. Inventories: U.S. crude and fuel inventories declined last week, with crude stocks falling by 2.8 million barrels, contrary to expectations of a small increase. Gasoline and distillate inventories also dropped, driven by stronger demand ahead of the Memorial Day holiday. Crude exports rose significantly by 794,000 bpd to 4.3 million bpd, contributing to the inventory draw. Imports of Nigerian crude reached their highest level since 2019 at 364,000 bpd, following a temporary outage at Nigeria’s Dangote refinery.
Market Overview: Oil prices start Friday lower and are set for a second straight weekly decline due to expectations of another OPEC+ output hike and ongoing uncertainty surrounding U.S. tariffs. Investors anticipate a significant production increase at the upcoming OPEC+ meeting, potentially exceeding the previous 411,000 barrels-per-day hikes. Analysts noted that reports of pre-agreement among some delegates have already weighed on prices, limiting the potential impact of any official announcement. A global oil surplus of 2.2 million bpd is also contributing to downward pressure, prompting speculation of a necessary price adjustment. Meanwhile, in the U.S., a court decision to temporarily reinstate Trump tariffs has added further uncertainty, contributing to recent market volatility.
U.S. Gasoline Demand
U.S. gasoline demand tipped over 9.4 million barrels per day last week putting it at the highest levels seen in the past 5 years for that week. Typically any demand reading over 9 million BPD is considered strong demand. With the U.S. driving season just kicking off this could be a positive indicator of the gasoline demand we could see this summer in the U.S. While demand is high, gasoline inventories in the U.S. and in Padd 2 (Midwest) remain below last years levels.
U.S. crude futures declined Friday on expectations that OPEC+ will increase oil output for July beyond prior forecasts. The global oil surplus has widened to 2.2 million barrels per day, prompting analysts to anticipate a price adjustment to restore market balance. Additional downward pressure on prices came from U.S. President Trump’s message about potential tariff changes on Chinese imports, combined with a court reinstatement of existing tariffs. Oil prices have fallen more than 10% since early April following tariff announcements. Furthermore, weaker U.S. consumer spending data for April contributed to the price decline.
