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OPEC+ Output Talk Stirs Bearish Sentiment
Oil fell nearly 2% Wednesday following a Reuters report that some OPEC+ members may push for accelerated output hikes in June. This proposal, if confirmed, could pressure prices further by increasing supply into an already cautious market. Disagreements over production quotas have long plagued the group, and renewed unity on higher output could mark a bearish turn for crude.
Trade War Headlines Add Noise to Price Action
While output concerns weighed on sentiment, conflicting U.S.-China trade headlines offered some near-term support. Reports suggest Washington may lower tariffs to foster trade talks, but official statements from the White House downplayed any imminent easing.
With tariffs still at extreme levels—145% on Chinese goods and 125% on U.S. exports—markets remain sensitive to any credible signs of resolution. A prolonged impasse, however, could severely cap China’s oil demand growth, with Rystad Energy halving their outlook to 90,000 bpd.
U.S.-Iran Tensions Keep Supply Risks in Focus
Geopolitical developments also remain a wildcard. Ongoing U.S.-Iran talks on reviving a nuclear agreement could eventually lift sanctions and increase Iranian crude supply, pressuring prices. Yet, the U.S. imposed fresh sanctions on Iran’s energy sector this week, dampening hopes of a quick breakthrough. Traders remain on alert for signs that talks could meaningfully impact global supply.
Inventory Data Paints Mixed Demand Picture
EIA data revealed a surprise crude stockpile build of 244,000 barrels, counter to expectations for a draw. However, strong draws in gasoline and distillates—down 4.5 million and 2.4 million barrels respectively—suggest ongoing demand strength, especially with refinery runs and jet fuel supply climbing. The four-week average for jet fuel deliveries hit 1.86 million bpd, the highest since late 2019.
Oil Prices Forecast: Bearish Bias Below Key $63.06 Pivot
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