• Crude oil inventories dropped by 5.241 million while gasoline stockpiles increased by 7.046 million barrels.
  • Iran plans to reach pre-sanction output levels in three months.
  • Investors are now focused on the OPEC monthly report scheduled for Thursday.

US oil inventory data

Crude oil price is reacting to the weekly US oil stockpile data. Late on Tuesday, API reported that the amount of crude oil in storage had dropped by 2.108 million barrels. While the figure represented a draw, it was lower than the forecasted fall of 3.576 million barrels and the prior week’s reading of 5.360 million barrels. 

EIA’s inventory data on Wednesday showed a higher oil draw. The agency presented a better-than-expected decline of 5.241 million barrels compared to the forecasted draw of 2.036 million barrels. In the prior week, the reading was -5.080 million barrels. 

Nonetheless, gasoline inventory data have curbed gains for the crude oil price. EIA indicated that the weekly gasoline stockpiles rose by 7.046 million compared to the forecasted 0.698 million barrels. This is the second consecutive week that gasoline inventories have recorded a build. Interestingly, the prior release showed that gasoline stockpiles rose by 1.500 million barrels on the week leading to the Memorial Day weekend. 

OPEC monthly report

In the ensuing sessions, the crude oil price will also be reacting to the OPEC monthly report scheduled for release on Thursday. On Monday, OPEC Secretary-General Mohammad Barkindo indicated that a further decline in oil inventories is expected in the coming months. During a virtual summit, Barkindo stated that the stockpiles have dropped by 160 million barrels in the developed countries compared to the same period in 2020. In April, the inventories in OECD nations declined by 6.9 million barrels.

Barkindo further noted that OPEC+ had seen the market’s positive reception of its supply management approach, including the decision to gradually increase production by 2 million bpd between May and July. During the Joint Ministerial Monitoring Committee (JMMC) meeting on 1st June, the leader stated that the outlook for the oil industry and the global economy is promising.  The coalition “anticipate that demand will surpass 99mb/d in the fourth quarter, which would put us back in the range of pre-pandemic levels.” 

Iranian oil

The official Shana news agency has quoted an official within the National Iranian Oil Co., stating that the country plans on reviving oil production within a month after the revival of the nuclear deal. The plan includes increasing its oil output by 3.3 million bpd in the first month and over 4 million bpd thereafter. This will mean that Iran will return to pre-sanction production levels in three months. 

However, on Tuesday, the US Secretary of State, Antony Blinken, indicated that multiple US sanctions on Iran would remain even with the Iranian nuclear deal. During a Senate hearing, the government official stated, 

“I would anticipate that, even in the event of a return to compliance with the JCPOA, hundreds of sanctions remain in place, including sanctions imposed by the Trump administration. If they are not inconsistent with the JCPOA, they will remain until Iran’s behavior changes.” 

Crude oil price technical outlook 

Crude oil price is down by 0.43% at 69.71. WTI futures are on a decline after hitting an intraday low of 70.62. Despite the drop, the prices remain on an uptrend. Since the beginning of the month, it has surged by close to 4.31%. Besides, it has risen by about 48.73% year-to-date. On a two-hour chart, it is trading the 25-day EMA and slightly above the 50-day EMA. With an RSI of 50, the outlook is rather neutral. However, I bear a bullish bias.

I expect crude oil prices to be range-bound in the near term before rising further. It is likely to find support along the 50-day EMA at 69.36. The horizontal channel’s upper border will probably be at Wednesday’s intraday high of 70.62. A move above the psychological level of 71 and below Tuesday’s low of 68.45 will invalidate this thesis.

Crude oil price chart