Crude Hits Target, Bias Shifts Back to Neutral

WTI Crude Oil Futures (June Future)

**BIAS SHIFT to NEUTRAL from NEUTRAL / BULLISH

Yesterday’s Settlement: 63.67, up +1.72 [+2.78%]   

The US-China trade deal and global risk-on flows helped boost crude again yesterday. A sharp fall in the Dollar also contributed to the rally alongside President Trump speaking in Saudi Arabia. 

The President pledged to take Iran’s oil exports to near zero in the nuclear negotiations failed, resulting in additional risk-premia buying through the day. The White House also implemented more sanctions on international companies with alleged ties to Iran’s Crude Oil exports. 

Subscribers to our research portal were alerted to our bias shift midday yesterday. While there is still some upside potential towards the 65.00 level, our target for the trade was around 62.50. Having reached our target, we would like to clear the book and wait for the next opportunity.    

Today, Crude Oil is down -0.69 [-1.08%] to 62.98 

The macro environment is trading mixed, with equities marginally higher, treasuries flat, and the Dollar weaker again.   

Last night’s API report was as follows [thousand bbls]:

• Crude: +4,290
• Gasoline: -1,370
• Distillates: -3,680

Estimates for today’s EIA report are as follows [thousand bbls]:

• Crude: -2,209 
• Gasoline: -938
• Distillates: 120
• Refinery Utilization: +0.70%  

Summary & Bias

Bias Summary from May 5th – 6th: 

The bearish catalyst that has kept us sidelined has now been realized. As we turn our analysis forward, the environment is chalked with bullish potential catalysts. Because of this, we shifted our bias to Neutral / Bullish the morning of May 5th on the Sunday night ~4% gap lower in futures.  

On paper, the forward-looking balance sheet looks oversupplied with accelerated OPEC hikes against a weaker demand outlook with the global economic slowdown we’re currently experiencing.

This will be the bear case, and it’s a valid case, but it uses somewhat lazy math. If you back out Iranian barrels, lower US production growth, and back out some Venezuelan barrels, the picture looks much different.

When you add some risk-premia for potential Russian sanctions and an escalation of the Middle Eastern conflict, you get to our bull case of the mid-60s level. 

We can now add improving US-China dialogue to the potentially bullish catalyst list. The top end of our medium-term outlook is $65, and we like prudent profit taking around $62.50. 

Added 5/12/2025: With an interim trade deal reached, the upside on crude is extended.Markets will now try and price in a revived Chinese economy after the trade deal and we’d like to see where price action goes through today.

Added 5/14/2025: Subscribers to our research portal were alerted to our bias shift midday yesterday. While there is still some upside potential towards the 65.00 level, our target for the trade was around 62.50. Having reached our target, we would like to clear the book and wait for the next opportunity. 

Technical Analysis:

WTI Crude Oil futures closed right at the top end of our longer-term pivot and point of balance at 63.53-63.81***. Prices are likely to consolidate between 61.83** and 63.53***. While we’ve shifted our bias back to neutral and we like clearing long positions, there is still some upside back towards 65.00.  

For intraday trading, our pivot and point of balance is set at…