August WTI crude oil (CLQ26) today is up +0.23 (+0.33%), and August RBOB gasoline (RBQ26) is up +0.1010 (+3.46%).
Crude oil and gasoline prices erased early losses and moved higher today, with gasoline posting a 3-week high. Short covering emerged in crude oil prices today after the crude crack spread soared to a 4-year high. Crude oil initially moved lower today as flows through the Strait of Hormuz continued to increase, boosting global oil supplies. Also, OPEC+ raised its crude oil production target on Sunday, a bearish factor for oil prices.
Crude prices garnered support today from a jump in the crude crack spread to a 4-year high. The stronger crack spread encourages refiners to increase their crude purchases and refine it into gasoline and distillates. Gasoline prices are climbing on concerns over tight global supplies as Ukraine continues to launch missile and drone attacks on Russian refineries, halting operations at several key Russian refineries and curbing global gasoline supplies.
Crude prices came under early pressure today after Saudi Arabia cut the price of its Arab Light oil to Asian customers for delivery next month by $11 a barrel, a larger decline than the -$8 a barrel expected.
Crude prices posted a 4.25-month low on Thursday as the recovery in oil flows through the Persian Gulf accelerated, sparking concerns of a supply glut. According to data compiled by Bloomberg, Saudi Arabian crude exports have risen to 6.3 million bpd, or 90% of pre-war levels. Also, the UAE ramped up shipments of crude oil and condensates by 30% in June to more than 3.9 million bpd, restoring its oil exports to pre-war levels.
Stronger Russian crude exports are also adding to global oil supplies and undercutting prices. Data compiled by Bloomberg show the four-week average of Russian crude exports rose to 4.13 million bpd through June 28, the highest since Russia invaded Ukraine in 2022. Russia may be boosting its crude exports as the country’s refining capacity has plunged due to damage at its refining facilities from Ukraine drone and missile attacks.
The International Energy Agency (IEA) warned on June 17 that the Iran war’s impact on global oil demand will be much deeper than previously anticipated, saying world oil consumption will decline by -1.1 million bpd this year, a larger drop than a previous estimate of -420,000 bpd.
The outlook for higher US crude output is negative for oil prices. The Department of Energy (DOE) on June 9 raised its US 2026 crude production estimate to 13.72 million bpd from a May estimate of 13.65 million bpd.
Crude prices have support from the continued Ukrainian drone attacks on Russian oil infrastructure. According to EA Analytics, Russian crude-processing rates averaged 4.32 million bpd in the first 10 days of June, the lowest in 20 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine. According to Bloomberg, Ukrainian forces have attacked Russian fuel-producing facilities more than 50 times this year, compared with 82 for all of 2025. As of the end of June, around 90% of Russian regions have imposed some form of fuel rationing or reported supply issues, as refining capacity has plunged following damage to facilities.
As a bearish factor for crude, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September. The group already formally agreed to restore about two-thirds of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to raise output targets further and to revive the final portion in three more monthly stages. On Sunday, 3, OPEC+ said it will boost its crude output by 188,000 bpd in August, although that production increase might prove difficult, as Middle East producers are still restarting output cuts caused by the war in the Middle East. OPEC’s June crude production rose by +2.34 million bpd to 18.75 million bpd.
Vortexa reported today that crude oil stored on tankers that have been stationary for at least 7 days rose +39% w/w to 112.1 million bbl in the week ended July 3.
Last Wednesday’s EIA report showed that (1) US crude oil inventories as of June 26 were -7.0% below the seasonal 5-year average, (2) gasoline inventories were -6.5% below the seasonal 5-year average, and (3) distillate inventories were -7.2% below the 5-year seasonal average. US crude oil production in the week ending June 26 fell -0.1% w/w to 13.81 million bpd, mildly below the record high of 13.862 million bpd posted in the week of November 7.
Baker Hughes reported last Thursday that the number of active US oil rigs in the week ended July 3 rose by +5 rigs to a 13-month high of 445 rigs, up from the 4.25-year low of 406 rigs posted in December 2025. However, the number of US oil rigs remains sharply below the 5.5-year high of 627 reported in December 2022.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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