Crude Slides on OPEC+ Hike Talk, Tariff Threats Stir Risk-Off Mood

WTI Crude Oil Futures (July Future)

Yesterday’s Settlement: 61.20, down -0.46 [-0.75%]

WTI Crude Oil futures fell in a global risk-off move yesterday. Failure at technical resistance on Wednesday, and reporting around OPEC+ production plans by Bloomberg aided in the fall.

Bloomberg reported that OPEC+ was discussing another +411k bpd production hike for July. The group is set to meet next week to decide on July production.

A +411k bpd hike in July has been somewhat assumed since the group decided on that figure for June. While output hikes are bearish, the group has been struggling to grow production enough to hit the much smaller +160k bpd hikes for April.

Today, Crude Oil is down -0.80 [-1.31%] to 60.40

The macro environment is trading sharply risk-off this morning after Trump threatened Apple and the EU with tariffs. The President threatened 50% tariffs on the EU on a Truth Social post.

Equities, crude oil and the Dollar are all sharply lower after the comments.

Data Releases:

N/A

Technical Analysis:

Futures failed at our longer-term pivot pocket of 64.09-64.16*** on Wednesday and settled below our key support level of 61.26-60.99** yesterday. Technical momentum favors the bears as we head into the Friday session.

We are eying the 59.56-60.08*** level closely. If this breaks, a run back to the lows around our major, rare 54.33-54.95**** level becomes much more probable.

This technical setup, combined with the OPEC+ meeting next week, does not look ideal for the bulls. We caution against taking open-ended risk from the long side into the weekend.

For intraday trading, our pivot and point of balance is set at 60.75 with support at 59.56*** and resistance at 61.75.

Bias: Neutral

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

Pivot: Intraday – 60.75 | 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….