In the world of oil trading right now, it’s an uncertain environment – with “risk on, risk off” and “tariffs on, tariffs off.” That creates a great range of trades. Overall, we see a backdrop of tightening oil supplies and the potential for less oil production in the US, notes Phil Flynn, senior energy analyst at The PRICE Futures Group.
We expect an agreement by OPEC to maintain their formal crude output quotas – and keep their 2-million-barrel production cut in place for 2026. The unity displayed by OPEC+ was notable. While the group may add some barrels back to the market in July, the group indicated that they might offset additional barrels with compensation cuts from other OPEC members. That could mitigate the effect of those extra barrels.
United States Oil Fund (USO)
Meanwhile, Chevron Corp. (CVX) plans to lay off nearly 800 employees in the Permian Basin, its largest oil production area, adding to concerns about Permian oil output. Bloomberg reported that the bulk of the reductions will come from Chevron’s Mid-continent campus on the outskirts of Midland, Texas.
The American Petroleum Institute also just said crude oil supplies decreased by 4.236 million barrels in the most recent week, which was larger than anticipated. Additionally, there was a moderate decrease in gasoline inventories of 528,000 barrels, and an increase in distillate inventories of 1.295 million barrels.
Natural gas prices dropped recently, but are expected to recover. Long-term fundamentals appear strong, though short-term prospects are less favorable. An increase in LNG exports later in the year may significantly improve the market. Comments from Germany regarding their natural gas imports added downward pressure on the market.
