Looking to the Futures

WTI crude whipsawed in Thursday’s trading, reaching a high of $110.93 on uncertainty around global economic growth and the status of the U.S.–Iran conflict. WTI crude oil futures for June delivery (/CLM26) settled at $105.07 per barrel, down $1.81 from the previous settlement.
 

Disruptions in the Strait of Hormuz continue to drive oil prices as U.S. President Trump committed to a prolonged naval blockade and suggested a possible break in the ceasefire. In response, Iran’s leader defended the country’s stance on nuclear and defense capabilities. The standoff is delaying roughly one-fifth of global oil supplies and reducing regional production as storage capacity nears its limits.
 

Before the conflict in the Persian Gulf, OPEC+ had been seeking to increase its production quotas by 206,000 barrels per day (bpd) by May and restore the pre-2024 cuts of 2.2 million bpd. OPEC may have to rethink its production strategy as the UAE announced it will leave the organization on May 1st. The UAE has the capacity to produce 4–5 million bpd, which it would be free to use without OPEC oversight.
 

The UAE has been mulling a departure from OPEC since Qatar withdrew its membership in 2019; officials were reportedly waiting for the right moment. High prices and a stronger demand outlook may have been that moment. The New York Times reported the following statement from the UAE’s Energy Minister, Suhail Al Mazrouei: “The world needs more energy. The world needs more resources, and [the] UAE wanted to be unconstrained by any groups.”
 

In a potentially bearish development, global economic data suggest a weaker world economy, which would indicate weakening demand for crude oil. U.S. Q1 GDP rose 2.0% q/q versus expectations of 2.3%, and Eurozone Q1 GDP rose 0.1% q/q versus expectations of 0.2%.
 

The weekly EIA petroleum inventories report showed declines in crude, gasoline, and distillate stocks, alongside an increase in refinery inputs. Crude oil inventories fell 6.2 million barrels to 459.5 million barrels. Gasoline inventories fell 6.1 million barrels to 222.3 million barrels. Distillate inventories fell 4.5 million barrels to 103.6 million barrels. Crude oil refinery inputs increased by 85,000 bpd to an average of 16.1 million bpd.
 

WTI crude oil futures for June delivery (/CLM26) settled at $105.07 per barrel, down $1.81 from the previous settlement. WTI opened Friday’s trading at $105.14 per barrel.
 

Crude oil has been in a bullish trend since the start of the U.S.–Iran conflict, which has disrupted global crude supplies. From a technical perspective, WTI remains bullish as it trades above the 20-, 50-, and 200-day simple moving averages (SMAs). The 20-day SMA is 97.49, the 50-day SMA is 90.24, and the 200-day SMA is 68.70.
 

The 14-day RSI is 60.29, below the 70 overbought threshold.
 

The directional movement index indicates a bullish trend that has seen recent pullbacks on the daily chart. The average directional index has started to rise again after falling to 24.7. The positive directional index remains above the negative directional index as the spread widens.
 

9-Day SMA                      247.386

20-Day SMA                    247.532

50-Day SMA                    240.646

200-Day SMA                  233.629

14-Day RSI                       71.1027%

Implied Volatility              16.77%

S&P Global U.S. Manufacturing PMI (Final) — 9:45 AM ET

ISM Manufacturing Index — 10:00 AM ET

Baker Hughes Rig Count — 1:00 PM ET
 

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