July WTI crude oil (CLN25) Thursday closed up +0.52 (+0.83%), and July RBOB gasoline (RBN25) closed up +0.0289 (+1.42%).

Crude oil and gasoline prices settled higher on Thursday, with crude posting a 2-week high.  Thursday's slump in the dollar index (DXY00) to a 6-week low is supporting gains in energy prices.  Also, hopes that US-China trade tensions will ease pushed crude prices higher Thursday after US President Trump spoke with Chinese President Xi Jinping by telephone.   Concerns about a global oil supply glut are limiting gains in crude, following a report by Bloomberg on Wednesday that Saudi Arabia is open to additional crude production hikes in a bid to increase its market share.

Reduced oil production in Canada is bullish for crude prices, as wildfires in Alberta, Canada, have shut down nearly 350,000 barrels per day (bpd) of crude production, approximately 7% of Canada's total output.  

Concern that a slowdown in the US economy will curb energy demand is negative for crude prices, following Thursday's news that weekly initial unemployment claims unexpectedly rose by 8,000 to a 7-3/4 month high of 247,000, indicating a weaker labor market than expected, with a decline to 235,000.

Crude prices were undercut Wednesday after Bloomberg reported that Saudi Arabia is open to additional crude production hikes in a bid to increase its market share.  The report stated that Saudi Arabia wants OPEC+ to increase crude output by 411,000 bpd in August and potentially in September to capitalize on peak summer demand.

Signs of a global oil supply glut are weighing on crude prices after crude oil inventories rose by 170 million barrels in the past 100 days, according to Kayrros, which monitors inventories.

A decline in crude oil held worldwide on tankers is bullish for oil prices.  Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -28% w/w to 72.07 million bbl in the week ended May 30.

Crude oil has support from last week's comments from President Trump, who said that Russian President Putin was "playing with fire" for his continued attacks on Ukraine.  CNN reported Tuesday that Mr. Trump could move ahead with new sanctions on Russia in the coming days.  Also, Senator Graham said he has the votes in Congress to pass a sweeping sanctions bill against Russia that would slap a 500% tariff on any country that buys Russian energy products.

Crude oil prices have been undercut by US-Chinese trade tensions that could cause slower global economic activity and reduced demand for crude.  President Trump said today that Chinese President Xi Jinping is "very tough and extremely hard to make a deal with." Mr. Trump's comments dampened optimism for a US-China trade deal in the near future.

Concern about a global oil glut is negative for crude prices.  On Saturday, OPEC+ agreed to a 411,000 bpd crude production hike for July.  On May 3, OPEC+ agreed to raise its crude production level by 411,000 bpd in June.  Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq.  OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production.  OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026.  OPEC May crude production rose +200,000 bpd to 27.54 million bpd.

Doubts about a nuclear deal between Iran and the US supported crude oil prices.  Iranian Supreme Leader Ali Khamenei recently said that he doesn't think negotiations with the US will succeed, and he urged the Trump administration to stop "talking nonsense." President Trump recently said Iran will face "something bad" if it doesn't quickly accept a US proposal over its nuclear program.

Crude has support due to the outlook for smaller global oil supplies after the US State Department recently slapped sanctions on an international network that facilitated the shipment of millions of barrels of Iranian oil to China.  The State Department sanctioned the alleged Iranian front company called Sepehr Energy Jahan Nama Pars for using revenue from the sales of crude to fund the development of weapons, including ballistic missiles and drones, nuclear proliferation, and Iran's "terrorist proxies."

In a supportive factor for crude oil prices, the US on January 10 imposed new sanctions on Russia's oil industry that could curb global oil supplies.  Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -810,000 bpd w/w to 3.24 million bpd in the week to May 25.

Wednesday's EIA report showed that (1) US crude oil inventories as of May 30 were -7.0% below the seasonal 5-year average, (2) gasoline inventories were -1.6% below the seasonal 5-year average, and (3) distillate inventories were -17.2% below the 5-year seasonal average.  US crude oil production in the week ending May 30 rose +0.1% w/w at 13.408 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.

Baker Hughes reported last Friday that active US oil rigs in the week ending May 30 fell by -4 to a 3-1/2 year low of 461 rigs.  The number of US oil rigs has fallen over the past two years from the 5-year high of 627 rigs posted in December 2022.