Morning Highlights: Oil Steadies After 1% Drop on Inventory Build, Saudi Price Cuts

Market Snapshot (as of 10:00 GMT | June 5, 2025)

🔹 Brent: $65.07/b (+$0.21, +0.3%)

🔹 WTI: $63.02/b (+$0.17, +0.3%)

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Key Market Drivers:

🔸 U.S. Inventory Data Disappoints

Wednesday’s EIA data showed a larger-than-expected build in U.S. gasoline and distillate inventories, signaling softer demand heading into the summer season. The services sector also contracted for the first time in nearly a year.

🔸 Saudi Arabia Cuts July OSP

Saudi Aramco cut its official selling prices (OSP) for July crude to Asia to nearly two-month lows—seen as a competitive move to maintain market share amid rising supply from OPEC+ and a softening demand outlook.

🔸 OPEC+ Strategy Remains Aggressive

OPEC+ agreed over the weekend to raise output by another 411,000 bpd in July. The cumulative reversal of voluntary cuts may reach 2.2 million bpd by October. The move, led by Saudi Arabia, is seen as an attempt to penalize over-producing members and challenge U.S. shale.

🔸 Canadian Wildfires Provide Some Support

Despite bearish signals, wildfires in Alberta have knocked out over 344,000 bpd of output. No critical infrastructure has been damaged, but the situation remains fluid.

🔸 Geopolitics & Trade Tensions Still Simmer

• Iran is expected to reject the U.S. nuclear proposal, supporting crude via ongoing sanctions.

• Trump’s comments about Xi Jinping being "extremely hard to make a deal with" cast doubt on swift trade resolution, with global oil demand expectations at risk.

• Traders remain on edge over escalating Russia-Ukraine strikes and new potential sanctions on Russia and Venezuela.

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Macro Watch:

• U.S. payroll data due Friday (June 6) may impact Fed rate expectations and broader market sentiment.

• OECD downgraded global growth outlook this week, citing Trump's tariff policy as a major drag.