Oil prices remain above $65 as mixed economic data and geopolitical developments drive the market.
Crude oil closed 0.52% higher on Tuesday, continuing its consolidation after last week’s sharp sell-off. Today, prices are up another 1.0% in response to news that Iran is restricting nuclear inspections. However, the market is merely retesting recent local highs, and the move is not particularly significant.
For oil markets specifically, these developments are worth monitoring:
- Oil prices are climbing on Wednesday after Iran suspended cooperation with the U.N. nuclear watchdog, escalating geopolitical risks.
- Iran enacted a law requiring future IAEA inspections to be approved by its Supreme National Security Council. This move follows heightened tensions after Israeli and U.S. strikes on Iranian nuclear facilities and officials.
- API data showed a surprise 680,000-barrel increase in U.S. oil inventories last week, defying forecasts for a 2.26 million barrel draw. This follows five weeks of stockpile declines and raises concerns over summer fuel demand.
- OPEC+ is expected to raise output by 411,000 barrels per day next month, matching increases from recent months. Analysts believe the market has already priced in these supply hikes, reducing their potential impact.
- Traders are eyeing Thursday’s U.S. non-farm payrolls data for clues on potential Fed rate cuts. Lower interest rates could stimulate economic activity and increase oil demand in the second half of the year.
Conclusion
Crude oil prices are advancing this morning despite a weaker-than-expected ADP Non-Farm Employment Change report. The market remains highly sensitive to geopolitical headlines - as demonstrated today by the news of Iran restricting nuclear inspections, which pushed prices higher and led to a retest of recent highs.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil rebounded on news from Iran, despite disappointing economic data.
- The ongoing tariff-related volatility, combined with economic data, is adding to market uncertainty.
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Thank you.
Paul Rejczak,
Stock Trading Strategist
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