Morning Highlights: Oil steady as market weighs macro outlook, Israel-Iran truce

Oil prices held relatively steady early Thursday after retreating from overnight gains, with traders cautious over the Israel-Iran ceasefire and shifting attention back to market fundamentals and macroeconomic signals.

Market snapshot (as of 6:30EST):

• Brent (Aug): $67.87 (+$0.19)

• WTI (Aug): $6513 (=$0.21)

Both benchmarks advanced by nearly 1% on Wednesday, recovering from earlier-week losses on the back of strong U.S. fuel demand and a larger-than-expected draw in crude stockpiles.

Demand rebounds as U.S. driving season picks up

Data from the Energy Information Administration (EIA) on Wednesday showed a 5.8 million barrel drop in crude inventories last week, well above analysts' expectations for a 797,000-barrel draw.

Gasoline stocks also fell by 2.1 million barrels, defying forecasts for a build, as gasoline supplied—used as a proxy for demand—rose to its highest level since December 2021, supporting bullish sentiment.

"The U.S. driving season is in full swing after a slow start," ANZ analysts said in a note. PVM’s Tamas Varga added that traders are rebalancing their focus toward underlying oil balances and macroeconomic drivers, even as they keep one eye on the Israel-Iran ceasefire.

Markets digest Israel-Iran ceasefire developments

The relative calm in the Middle East has helped ease geopolitical risk premiums, though analysts remain cautious about a potential re-escalation. UBS analyst Giovanni Staunovo noted oil likely followed equities lower Thursday morning, reflecting broader risk-off sentiment.

On Wednesday, U.S. President Donald Trump hailed the ceasefire between Israel and Iran and indicated that Washington would seek assurances from Tehran on its nuclear ambitions during talks next week. Trump added that the U.S. is not abandoning its maximum-pressure campaign on Iranian oil exports but may ease enforcement temporarily to support reconstruction efforts.

OPEC+ output hikes may come earlier

On the supply front, Rosneft CEO Igor Sechin said over the weekend that the OPEC+ group could move up its production increases by about a year, signaling more supply could enter the market sooner than initially expected.

Infrastructure updates: Canada moves to boost exports

Separately, Enbridge said it is evaluating a new pipeline to increase Canadian oil shipments by up to 200,000 bpd to the U.S. Gulf Coast. Dubbed the Southern Illinois Connector, the pipeline would link Enbridge’s Mainline system to Energy Transfer’s crude system at Patoka, Illinois. An open season is ongoing until mid-July, testing shipper interest.

The move comes as Canadian oil sands output is expected to reach 3.5 million bpd this year and climb to 3.9 million bpd by 2030, according to industry forecasts. Alberta is also planning a new pipeline to British Columbia’s northwest coast to diversify export routes away from the U.S.

Meanwhile, Canada’s federal government has proposed Bill C-5, aiming to streamline environmental reviews and accelerate the timeline for new oil and gas infrastructure, including pipelines. Enbridge welcomed the proposal, saying shortened approval processes would help align infrastructure development with growing shipper demand.