Rich Asplund
4 min read
In This Article:
August WTI crude oil (CLQ25) today is up +0.30 (+0.46%), and August RBOB gasoline (RBQ25) is up +1.26 (+0.61%).
Crude oil and gasoline prices are rising today after the dollar index (DXY00) fell to a 3 1/3-year low. Also, concern that Middle East tensions could flare up again are pushing crude prices higher after Iran moved to cut off communications with the International Atomic Energy Agency (IAEA). Additionally, better-than-expected global economic news today is supportive of energy demand and crude oil prices. Gains in crude are limited by expectations that OPEC+ will increase its crude production level by another 411,000 bpd when they meet on Sunday.
Crude oil found support today after Iran moved to cut off communications with the IAEA, which could prompt the US and or Israel to launch additional attacks on Iran's nuclear sites. President Trump said the US will "be there" unless Iran backs away from its nuclear program.
Today's global news showed economic strength that was positive for energy demand and crude prices. The US June ISM manufacturing index rose +0.5 to 49.0, stronger than expectations of 48.8. Also, the June ISM prices paid sub-index rose +0.3 to 69.7, stronger than expectations of 69.5. The US May JOLTS job openings unexpectedly rose +374,000 to a 6-month high of 7.769 million, showing a stronger labor market than expectations of a decline to 7.300 million. In addition, the Eurozone June manufacturing PMI was revised upward by +0.1 to 49.5 from the previously reported 49.4. Finally, Japan's Tankan Q2 large manufacturing business conditions survey unexpectedly rose by +1 from Q1 to 13, stronger than expectations of a decline to 10.
Concern about a global oil glut is negative for crude prices. Last Wednesday, Russia stated that it is open to another output hike for OPEC+ crude production in August, when the group meets this Sunday. On May 31, OPEC+ agreed to a 411,000 bpd crude production hike for July after raising output by the same amount for June. Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production. OPEC+ had previously planned to restore production between January and late 2025; however, production cuts won't be fully restored until September 2026. OPEC May crude production rose +200,000 bpd to 27.54 million bpd.
