Crude Prices Settle Higher as Weekly EIA Inventories Tumble

August WTI crude oil Wednesday closed up 0.85%, and August RBOB gasoline  closed down 0.24%.

Crude oil and gasoline prices on Wednesday settled mixed.  Crude oil found support on Wednesday's bullish weekly EIA report, which showed a larger-than-expected draw in crude oil inventories and a surge in US gasoline demand to a 3-1/2 year high.

However, crude prices fell back from their best level and gasoline turned lower after Russia said it's open to another output hike at the next OPEC+ meeting on July 6.  Also, there is speculation that the US may soon lift sanctions on Iranian crude exports, following President Trump's announcement that the US will hold a meeting with Iran next week.  

Concern about a global oil glut is negative for crude prices.  On May 31, OPEC+ agreed to a 411,000 bpd crude production hike for July after raising output by the same amount for June.  Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq.  OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production.  OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026.  OPEC May crude production rose +200,000 bpd to 27.54 million bpd.

Gasoline prices have support from the American Automobile Association (AAA) projection that a record 61.6 million people will travel by car this Fourth of July holiday (June 28 to July 6), up +2.2% from last year and a sign of stronger gasoline demand.

Oil prices continue to be undercut by tariff concerns, as President Trump recently stated that he intends to send letters to dozens of US trading partners within one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that followed his 90-day pause.