Risk Premium Rises After Hours—Crude Tests Resistance

WTI Crude Oil Futures (July Future)

Yesterday’s Settlement: 62.03, down -0.11 [-0.18%]

Oil futures settled lower yesterday as a global risk-off tone and adverse commentary out of China weighed on them. In yesterday’s overnight session, Iran’s leader called President Trump’s comments on being close to a nuclear deal “nonsense,” which drove futures higher around 3 am.  

Europe sanctioned 200 oil & gas tankers allegedly a part of Russia’s “shadow fleet”. The West is tightening sanctions as Putin holds back on legitimate ceasefire negotiations.

Today, Crude Oil is up +0.85 [+1.37%] to 62.88

After the close yesterday, around 5 pm CST, CNN dropped a headline that Israel is preparing to strike Iranian nuclear facilities. The headline was quickly retweeted and spread, driving crude futures higher by 2.00 at the reopen. The actual article was far less alarming than the headline. 

The Trump-Netanyahu relationship is becoming more and more strained as Israel appears to be dead-set on waging total war on Shia factions across the Middle East. When combined with the breakdown in Russia-Ukraine talks, geopolitical risk premia looks like it will stay elevated for now.

Data Releases:  

The API report after yesterday’s close is shown below [thousand bbls]:

• Crude: +2,500
• Gasoline: -3,240
• Distillates: -1,400   

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

• Crude: -1,100
• Gasoline: -2,000
• Distillates: -1,400
• Refinery Utilization: +0.70%

Technical Analysis:

The rapid move higher after hours failed at our major pivot level of 64.09-64.16***. The CNN article was less alarming than the headline led people to believe. If futures do manage to settle above 63.56***, momentum will shift to favor the bulls. 

A neutral range-bound market would still seem probable if July futures settle below the 63.11*** level.  

For intraday trading, our pivot and point of balance is set at 62.60 with support at 61.50 and resistance at 63.56***.    

Bias: Neutral 

Resistance: 63.11-63.56***, 65.41-65.92***

Pivot: Intraday – 62.00 | Longer Term: 64.09-64.16***

Support: 54.33-54.95****, 57.15-57.62**, 59.56-60.08**, 61.00-61.26**

Summary & Bias History

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