June WTI Crude Oil Futures (CLM25) settled lower on Wednesday at $58.07, down $1.02 (-1.73%), marking a sharp reversal from Tuesday’s rally. Despite early morning strength, crude gave up gains midday as the U.S. dollar firmed and traders assessed a less tense geopolitical backdrop across key flashpoints.
Market Context – May 7, 2025
Crude markets opened firm on optimism surrounding U.S.-China trade progress. Beijing’s overnight announcement of a larger-than-expected stimulus — including a cut to both interest rates and the bank reserve ratio — was viewed as a potential tailwind for global demand. Momentum was further supported by expectations of positive sentiment following the Fed’s FOMC meeting.
However, the tide shifted midday:
- The U.S. dollar index strengthened, applying downward pressure on commodities priced in dollars.
- Geopolitical tension in the Middle East eased, with the U.S. announcing a halt to airstrikes in Yemen following a ceasefire brokered by Oman. Meanwhile, Vice President Vance hinted at renewed dialogue with Iran, raising the possibility of reintroducing Iranian barrels to the market — a bearish risk for crude.
EIA Inventory Data – Mixed Signals
The EIA’s weekly petroleum report provided mixed inputs for the market:
- Crude oil inventories fell by -2.03 million barrels, a slightly larger draw than the expected -1.85 million bbl.
- Distillates dropped by -1.11 million bbl, hitting a 17-month low and well below expectations.
- However, gasoline stocks unexpectedly rose by +188,000 bbl, against forecasts for a 1.2 million bbl draw.
- Ethanol inventories also declined by -198,000 bbl, pointing to sustained seasonal fuel demand.
Additional EIA highlights:
- U.S. domestic crude production dipped to 13.367 million bpd, down 0.7% on the week and modestly below record highs.
- Refinery utilization held steady at 89%, reflecting strong downstream throughput.
- Cushing inventories, key for WTI pricing, fell by -740,000 bbl.
From a structural standpoint:
- Crude inventories are now 7.3% below the 5-year seasonal average
- Gasoline stocks are 3.1% below
- Distillates remain 13.1% below the seasonal benchmark
OPEC+ Dynamics and Global Flows
The market continues to digest Saturday’s OPEC+ announcement to raise output by 411,000 bpd in June, a move seen as a rebalancing effort after two years of coordinated supply cuts. While Saudi Arabia hinted at further increases aimed at disciplining overproducing members like Kazakhstan and Iraq, April OPEC output actually declined by -200,000 bpd, suggesting limited spare capacity or growing internal friction.
Meanwhile, Russian exports remain in focus:
- Crude shipments from Russia fell -190,000 bpd last week, even as oil product exports in March hit a five-month high of 3.45 million bpd.
- New U.S. sanctions targeting Russian exporters and tankers could restrict flows further, especially if legislative efforts to impose tariffs or debt restrictions gain traction.
After Sunday night’s breakdown below $60. the path forward remains volatile.
Key Stats (EIA – Week Ending May 2):
- WTI Settlement: $58.07
- Crude Change: -2.03M bbl
- Gasoline: +188k bbl
- Distillates: -1.11M bbl
- Ethanol: -198k bbl
- Cushing Draw: -740k bbl
- Domestic Production: 13.367M bpd
- Refinery Utilization: 89%
