August WTI crude oil (CLQ25) on Tuesday closed down -0.46 (-0.69%), and August RBOB gasoline (RBQ25) closed up +0.0042 (+0.19%).

Crude oil prices continued to show weakness on Tuesday after President Trump refrained from imposing new sanctions on Russian oil exports on Monday.  Mr. Trump only threatened tariffs on Russia in the future if Russia doesn't agree to a ceasefire, and said the US might slap tariffs on countries that buy Russian oil, such as China and India.  

Oil prices on Tuesday were also undercut by the +0.5% rally in the dollar index.

Oil prices received some support Tuesday after US Energy Secretary Chris Wright said the US is considering creative ways to refill the US Strategic Petroleum Reserve.

In a supportive factor for oil prices, Bloomberg reported last Thursday that OPEC+ is discussing a pause in further production increases from October, following its next monthly hike in September of 548,000 barrels.  OPEC+ may be concerned about a slowdown in global oil demand in the second half of this year that could lead to a supply glut if the group keeps boosting production.  The International Energy Agency said inventories have been accumulating at a rate of 1 million bpd and that global crude oil market faces a surplus by Q4-2025 equivalent to 1.5% of global crude consumption.

Concern about a global oil glut is negative for crude prices.  On July 5, OPEC+ agreed to raise its crude production by 548,000 barrels per day (bpd) beginning August 1, exceeding expectations of a 411,000 bpd increase.  Saudi Arabia also stated that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and penalize 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 by September 2026.  On May 31, OPEC+ agreed to a 411,000 bpd increase in crude production for July, following the same 411,000 bpd hike for June.  June crude production rose +360,000 bpd to a 1.5-year high of 28.10 million bpd.

A decrease in crude oil held worldwide on tankers is bullish for oil prices.  Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -4.6% w/w to 78.03 million bbl in the week ended July 11.

Last Wednesday's EIA report showed that (1) US crude oil inventories as of July 4 were -8.0% below the seasonal 5-year average, (2) gasoline inventories were -1.2% below the seasonal 5-year average, and (3) distillate inventories were -23.6% below the 5-year seasonal average.  US crude oil production in the week ending July 4 fell -0.4% w/w to 13.385 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.

Baker Hughes reported last Friday that active US oil rigs in the week ending July 11 fell by -1 rig to a new 3.75-year low of 424 rigs.  Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.25-year high of 627 rigs reported in December 2022.