On Tuesday, August WTI crude oil closed down by $4.14 (-6.04%) and August RBOB gasoline fell by $0.1282 (-5.83%), reaching 1-1/2 week lows. This decline followed President Trump’s announcement of a ceasefire in the Israel-Iran conflict, which alleviated concerns over disruptions to Middle Eastern crude supplies. Oil prices further weakened as Trump stated that China could continue purchasing Iranian oil, suggesting potential easing of U.S. sanctions on Iranian crude exports.
OPEC+ is ramping up crude production, agreeing to a 411,000 barrels per day increase for July after a similar rise in June, with a cumulative restoration of 2.2 million bpd planned. As of May, OPEC crude production had risen by 200,000 bpd to 27.54 million bpd. Meanwhile, the American Automobile Association (AAA) forecasts a record 61.6 million travelers over the Fourth of July holiday, indicating a 2.2% increase in gasoline demand.
In inventory data, expectations for Wednesday’s EIA report predict a decline of 1.1 million bbl in U.S. crude inventories, while gasoline supplies are anticipated to increase by 500,000 bbl. Additionally, U.S. active oil rigs dropped to a three-and-a-quarter-year low of 438, reflecting a significant reduction from the peak of 627 rigs in December 2022.
