DTN Oil Update
Oil Futures Mixed on Expectations of Additional OPEC Supply
HOUSTON (DTN) -- Oil futures were mixed to close the week on Friday, driven by expectations of ample global supplies as OPEC countries are anticipated to increase output in August, amid sluggish demand.
The front-month NYMEX WTI futures contract remained almost flat at $65.30 bbl, while the ICE Brent futures contract for August delivery edged up by $0.11 to $67.62 bbl.
The July RBOB gasoline futures contract slid by $0.0125 to $2.0865 gallon, while the front-month ULSD futures contract dropped by $0.0611 to $2.2990 gallon.
The U.S. Dollar Index strengthened by 0.273 points to 97.035.
This morning the oil futures price increased after Chinese and U.S. American government officials confirmed progress in trade negotiations. A trade deal was signed this week, formalizing the agreement reached in London last month, according to Commerce Secretary Lutnick. The Chinese Commerce Ministry on Friday confirmed his comments.
The deal would loosen ethane export restrictions from the United States to China in return for rare earth flows. While most details remain unknown, the agreement will likely keep tariffs at or near current levels, codifying the 90-day tariff freeze.
The bullish sentiment was also supported by a weekly U.S. government inventory report showing oil and product stocks declining, with commercial crude oil inventories falling for a fifth straight week to an 11-year seasonal low. Diesel inventories tightening to 20% below the five-year average further lent support.
Oil futures have fallen back to pre-war levels after a turbulent week. As the geopolitical risk-premium has almost entirely evaporated, market participants will likely return their focus to market fundamentals, with the direction of U.S. trade policy, global demand growth and the speed of OPEC output hikes remaining the largest sources of uncertainty.
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