Daily Energy Market Update July 7,2025

WTI is up 16 cents        RB is up 1.50 cents      ULSD is up 2.54 cents

Energy prices are higher versus Thursday's settlements as the market has "shrugged" off the larger than expected OPEC increase in production announced over the weekend. Prices are well off the lows for the 2 day session. The market seems to agree with the OPEC+ statement that fundamentals are healthy.

OPEC at their meeting Saturday decided to raise output by 548 MBPD in August. That was more than the expected increase of 411 MBPD. OPEC+ cited a steady global economic outlook and healthy market fundamentals, including low oil inventories, as reasons for releasing more oil. With the August increase, OPEC+ will have released 1.918 MMBPD since April, which leaves just 280 MBPD to be released from the 2.2 MMBPD cut they made in 2023. (Reuters) Bloomberg cites the fact that U.S. refiners are using the most amount of crude seasonally this year since 2019 as amplifying the OPEC+ comment of healthy market fundamentals. News commentaries cite an urge by the Saudis to regain market share for the increase in production.  Actual increases have lagged behind quotas in previous months. April's 138 MBPD rise resulted in only 16 MBPD of real output by the eight OPEC+ countries, while May's 411 MBPD quota translated into just 154 MBPD, according to UBS. (WSJ)

Reuters reports that OPEC+ oil producers are set to approve another big output boost for September as they complete both the unwinding of voluntary production cuts by eight members and the United Arab Emirates' move to a larger quota, five sources said. The five sources familiar with the discussions said on Monday the group is likely to approve an increase of around 550 MBPD for September when it meets on August 3. That increase in production will complete the return of the 2.2 MMBBPD cuts and will add 300 MBPD from the UAE as it pivots to a larger quota. Bloomberg reporting cites the actual May increase in OPEC+ production at 200 MBPD versus the proposed hike of 411 MBPD.

On Friday, Reuters reported that OPEC oil output rose in June. OPEC pumped 27.02 MMBPD last month, up 270 MBPD from May's total, with Saudi Arabia making the largest increase. The OPEC members' assigned quotas were to raise output by 313 MBPD in June before the effect of compensation cuts totaling 173 MBPD for Iraq, Kuwait and the United Arab Emirates. According to the Reuters survey, the actual increase by the five OPEC members who are among the 8 OPEC+ members agreeing to output increases, was 267 MBPD, with Saudi Arabia accounting for 200 MBPD, although it is still pumping less than its quota.

President Donald Trump has threatened new tariffs on any nation supporting “anti-American” policies of the BRICS group of emerging economies, as he announced tariff letters would be sent out to scores of countries from Monday, ahead of a key deadline. The BRICS group is meeting this week in Brasil.  The U.S. administration’s 90-day tariff pause is set to come to an end on Wednesday. “If you don’t move things along, then on August 1 you will boomerang back to your April 2 tariff level,” U.S. Treasury Secretary Bessent said about trading partners Sunday.  (CNN)  The deadline of August 1 is seen by some in news wire accounts as giving countries 3 more weeks within which to agree to a tariff deal. 

Last Thursday, the U.S. announced new sanctions against Iran. The Treasury and State departments on Thursday announced separate sanctions on companies and a “shadow fleet” of vessels that help Iran export its crude. The list includes several companies that allegedly sell oil from Iran to Western buyers by falsely declaring their shipments as Iraqi. U.S. Treasury officials  said that Iran "relies on non-sanctioned vessels to conduct ship-to-ship transfers and receive Iranian oil from sanctioned vessels before shipping the Iranian-origin cargo to buyers in Asia." (Bloomberg)

Saud Arabia announced their August OSP prices today. The Saudis raised the price for their flagship A-Light crude to Asia by $1.00. The rice is thus at a 4 month high. Te price to Asia for their Heavy crude rose by 90 cents. Their Medium crude OSP was raised by $1.00. Prices for Saudi crude oil to NW Europe and the Mediterranean rose by $1.40 for August loadings. Prices to the U.S. were anywhere from unchanged to +40 cents.

There has been an increase in tension in the Mideast in recent days. Israeli Defense Forces struck three ports in Yemen overnight Monday local time, alleging that the ports are used by the Houthi forces to "transfer weapons from the Iranian regime." Israel claims that Houthi missiles were launched at them after a ceasefire between Israel and Hamas began. (ABC News) An attack on a vessel in the Red Sea was reported on Sunday, which was the first attack there in months. The attack was near a port in Yemen and is believed to have been carried out by the Houthis, who are said to control the Yemeni port. (Jerusalem Post)

GasBuddy commentary says that "odds are improving that the national average could dip below $3 per gallon later this summer, and we could see the national average falling to its lowest summer level since the pandemic." (wkyc.com) The AAA said today that the national average gasoline price at the pump is $3.143, which is the lowest price seen since June 16. 

The Baker Hughes oil rig count issued last Thursday showed a decrease of 7 units. The Permian basin saw a decrease of 5 units.

The CFTC COT report of money managers' positions will be released today at 3:30 PM EDT, due to last week's holiday.

August RB support lies at 2.0795-2.0813. Resistance is seen at 2.1403-2.1419 and then at the 2.16 area.

ULSD August futures see support at the overnight low at 2.3668-2.3669 and then at 2.3406-2.3422. Resistance lies above at 2.4227-2.4235 and then at 2.4524-2.4531.