May 23, 2025 (MarketLine via COMTEX) --
Crude oil prices witnessed a slight decline overall during the week largely in anticipation of a surplus crude scenario in global markets. Talks over on a Ukraine peace accord advanced during the week that would potentially lead to the easing of Western sanctions on Russian energy exports. Prices also declined after the US-Iran discussions broke down over the latteraEUR(TM)s demand to continue with uranium enrichment, thus putting its energy exports in jeopardy. Prices also came under pressure from weak consumption data from China and a rise in weekly US crude oil inventory. However, oil producers in the US slashed their rig counts, which would likely see their output declining in the near future, thereby containing the fall in prices. Additionally, the onset of summer driving season in the US raised hopes of a lift in gasoline consumption, thus further mitigating the slide in prices during the week.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices rose slightly on Monday, supported by reports that talks between US and Iran over the nuclear deal had hit a roadblock. Following these reports, an Iranian Minister indicated that the country intended to continue enriching uranium, which the US is strongly against. Thus, the derailment in these talks raised hopes of the US retaining, and perhaps even tightening the sanctions on Iran’s crude oil exports. However, the upside to prices was largely eroded by signs of a ceasefire deal in the Ukraine conflict, which could potentially see all sanctions on Russian energy exports lifted. After a telephonic discussion with the US President Trump, Russian President Putin expressed confidence in working with the Ukrainian leadership to install long-lasting peace in the country. Oil prices dipped on Tuesday, weighed down by sluggish consumption growth in China, implying a likely dip in the country’s energy consumption. As per the country’s National Bureau of Statistics, retail sales grew annually by 5.1% in April 2025 which was below expectations. China’s industrial output growth was also lower last month compared to March 2025, rising year-on-year by 6.1%. Besides, while Europe worked on new sanctions package on Russia, the US revealed that it was unlikely to impose any new sanctions amid negotiations over a ceasefire in Ukraine. This pressured prices further down as it raised the possibility of the US easing its restrictions on Russian entities in the event of a peace accord, allowing the latter to sell its energy products globally. However, the slide in prices was somewhat restricted by reports that Israel was likely to conduct strikes on nuclear installations within Iran.Oil prices dipped further on Wednesday and Thursday, weighed down by global crude oil oversupply concerns following reports that the OPEC+ group was evaluating another large production increase for July 2025. The group had agreed to raise its collective output for June 2025 by 411,000 barrels per day (bpd) and reports speculated an announcement over a similar hike during its next meet on June 1, 2025. Prices were also weighed down by a weekly build in the US crude and fuel stockpiles. According to the US Energy Information Administration (EIA), crude inventory in the country rose by 1.3 million barrels for the week ending on May 16, 2025. The country’s gasoline and distillate stockpiles also rose by 800,000 barrels and 600,000 barrels over the same week. Oil prices rose slightly on Friday, supported by an anticipated increase in gasoline consumption in the US during the summer driving season, starting with the Memorial Day holiday on Monday. An assessment from the American Fuel & Petrochemical Manufacturers indicated that domestic travel would hit a two-decade high over the forthcoming weekend. Prices also received support from prospects of reduced crude supply from the US as operators continued to cut down on rig usage amid tight margins. According to Baker Hughes, the number of oil rigs in the US dropped by eight, while gas rigs were down by two during the week ending on May 23, 2025.
http://www.datamonitor.com
Republication or redistribution, including by framing or similar means,
is expressly prohibited without prior written consent. Datamonitor shall
not be liable for errors or delays in the content, or for any actions
taken in reliance thereon
COMTEX_466108842/2227/2025-06-05T09:36:34
Copyright (C) 2025 Datamonitor. All rights reserved
