Current fuel demand optimism is proving itself to be supportive of energy prices; WTI crude oil prices have been trading firm for the last several months following the global recovery in energy consumption post-COVID. At time of writing, WTI crude oil was trading at $73.53, which is sharply higher from last week's low of $69.77.
However, the crude oil rally is likely to be capped following Russia's call for OPEC+ to boost crude output in August. According to a Bloomberg report, Russia is considering a proposal that OPEC+ increase its crude production when the group meets on July 1.
OPEC+ has already revived about 2 million BPD of its idle production from May to July, but some members have been calling for an increase in output as crude prices have rallied to a 2-1/2 year high. However, Saudi Energy Minister Abdulaziz bin Salman said last week that he wants to see clear evidence of a strong demand recovery before restoring more halted production.
In a progressive step towards US-Iran nuclear talks, Ebrahim Raisi, Iran's newly-elected president, said that "he seriously recommends the U.S. government swiftly return to its commitments and remove the entirety of the sanctions."
According to the CFTC Commitments of Traders report for the week ended June 15, net long for crude oil futures jumped by 13,457 contracts to 5, 23,956 for the week. The speculative long position gained by 7013 contracts, while shorts fell 6,444 contracts.
On the inventory front, US crude oil inventories as of June 11 were -5.1% below the seasonal 5-year average, gasoline inventories were +0.5% above the 5-year average, and distillate inventories were -6.0% below the 5-year average. Crude oil prices are likely to get fresh direction from the weekly EIA inventory report which is scheduled for release later today.
Meanwhile, US crude oil production in the week ended June 11 rose +1.8% w/w to a 1-year high of 11.2 million BPD. Baker Hughes reported Friday that active US oil rigs rose by +8 rigs to a 14-month high of 373 rigs last week. An increase in oil rigs indicates higher oil production in the US.
The WTI crude oil price is likely to trade firm while above the key support level of 20 day EMA at $69.78 and 50 day EMA of $67.08. It may find stiff resistance near $73.17-$74.69.