1. Oil Prices Pressured by OPEC+ Supply Surge & U.S. Tariff Risk
- On July 7, Brent crude futures surged nearly 2% to $69.58, while WTI rose 1.4% to $67.93. This was driven by demand optimism despite an unexpected OPEC+ output hike for August.
- By July 8, prices eased slightly: Brent dipped to $69.46, WTI to $67.68, as markets digested U.S. tariff developments and the production boost.
- Commentary from Stratas Advisors noted Brent ending at $68.30, with expectations it could test $66 amid U.S. tariff threats and OPEC+ moves (hartenergy.com).
What’s next?
- OPEC+ has confirmed an additional 548,000 bpd increase in August, with Goldman projecting a further 550,000 bpd hike in September, likely culminating in a total supply lift of 2.2 million bpd from voluntary cuts.
- Wall Street banks slightly revised forecasts upward—Goldman Sachs now anticipates Brent averaging $66.32 in 2025 (WTI: $63.03), though a bearish outlook persists due to lingering oversupply. Q4 forecasts: Brent $63.87, WTI $60.69 (wsj.com).
- Morgan Stanley expects a further decline to ~$60/bbl by early 2026 amid ample supply and easing geopolitical risks (reuters.com).
2. Middle East Geopolitics Remain a Wildcard
- June’s Israeli strikes on Iran briefly sent Brent crude up 11%, peaking oil risk perceptions. However, markets have largely shrugged off the threats, keeping prices below $70.
- Warnings of a Strait of Hormuz blockade heightened the risk; analysts stated closure could spike oil prices beyond $100–150, given the Strait handles some 18–19 million bpd (~20% global supply).
3. Natural Gas: Cooling Prices, Heatwave Watch
- U.S. natural gas futures for August (NGQ25) held firm at around $3.45/mmBtu, as markets balanced ample storage (+6.2% vs 5-year average) with warming summer forecasts (barchart.com).
- However, prices dipped ~3.6% to $3.847/mmBtu as profit-taking surfaced ahead of hotter mid-July forecasts (wsj.com).
4. Major Producers Flag Earnings Pressure
- Exxon Mobil forewarned of a $800M–$1.2B hit to Q2 upstream profits from lower crude, plus $300M–$700M from weak natural gas prices. Q1 upstream profit was $6.8B; the full earnings release is due August 1 2025.
- Shell projected weaker integrated gas and LNG trading results in Q2, expecting $1.4–$1.8B earnings and dropping production slightly. Its stock fell ~3% after the warning.
- Across the sector, Q2 earnings are forecast to fall ~17% amid ~10% oil price decline and gas price softness.
5. Futures and Market Structure: Volume & positioning
- NYMEX WTI futures closed July 8 at $67.66/bbl, down ~0.4% from the previous day, but are up ~3.6% over the past month (tradingeconomics.com).
- Trading volume on NYMEX rose: ~720,000 contracts traded July 7 (compared to ~630,000 previous session). Open interest dropped by ~38,600 contracts to ~2.03 million.
- Barchart data on July 7 showed August WTI futures (CLQ25) closed at $67.77, +1.39%, supported by Saudi Aramco’s Asia-bound pricing signal and Middle East tension.
6. Fuel Prices & Consumer Impact
- End‑user prices reflect this volatility:
- U.S. average regular gas: ~$3.16/gal, down 6¢ week-on-week, 35¢ YOY
- Diesel: ~$3.69/gal
- Consumers may yet see further declines as OPEC+ maintains supply growth (businessinsider.com).
- U.S. average regular gas: ~$3.16/gal, down 6¢ week-on-week, 35¢ YOY
Outlook & Takeaway
Strategy insights:
- Short-term: Expect broad trading range between $65–$70/bbl for WTI, with spikes tied to disruptions.
- Q4–2026: Market projections lean bearish—Brent in low $60s, WTI around $60/bbl.
- Natural Gas: Watch heat forecasts—mid-July could push prices toward $4/mmBtu, after which moderate storage and demand may stabilize prices in the $3–3.50 range.
This dynamic backdrop makes the upcoming August/September OPEC+ decisions especially pivotal—futures traders, producers, and consumers alike should monitor these cues closely.
