WTI crude oil futures rise above $63 per barrel, up 0.54% intraday.

WTI crude oil futures rise above $63 per barrel, up 0.54% intraday.

WTI crude oil futures surged above $63 per barrel on July 2, 2025, marking a significant intraday increase of 0.54%. This move comes amidst a complex market environment characterized by conflicting signals from various geopolitical and supply-demand dynamics.

The price of WTI crude (CL=F) reached $63.14 per barrel, up 1.27% from the previous day's close. This uptick follows a period of relative stability in late August, where WTI crude had been trading at around $63.14, while Brent crude (BZ=F) was at $66.70. The rise in WTI prices is attributed to a combination of factors, including increased demand for refined products and geopolitical tensions.

Norway's July crude output, which reached 1.958 million barrels per day (bpd), nearly 150,000 bpd above forecasts, has bolstered Europe's supply resilience. This production surge is partly due to the ramp-up of the Johan Castberg field to its full capacity of 220,000 bpd. Additionally, the Norwegian government's 26th licensing round signals further capacity additions, potentially creating a bearish outlook for long-term balances.

Despite the near-term weakness in the Brent futures curve, the market is presenting an unusual shape. Spot and near-term contracts are in backwardation, with prompt barrels priced above deferred ones, which is typically a bullish signal. However, both the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) project a significant increase in global supply by 2025 and 2026, which could lead to a glut in the market. This "smile" in the forward curve is a red flag for traders holding long positions into 2026, as storage economics could abruptly shift.

Geopolitical tensions have also played a role in the market dynamics. The Druzhba pipeline, a key artery for Russian flows into Central Europe, was briefly disrupted by a Ukrainian drone strike. Flows have since resumed, but the vulnerability of landlocked refiners still reliant on Russian crude has been highlighted. Meanwhile, Washington's escalation of trade pressure on India with a 25% tariff increase has led to a temporary halt in spot purchases by Indian refiners, though they have since returned due to the attractiveness of Urals crude at a $3 per barrel discount.

In the U.S., the Energy Information Administration (EIA) reported a 6 million barrel draw for the week ending August 15, bringing commercial stocks to 420.7 million barrels. This draw supports short-term prices but is overshadowed by projected global builds into 2026. Additionally, the Strategic Petroleum Reserve (SPR) rose 400,000 barrels to 403.4 million, marking a rare refill in a year dominated by political debates over depletion.

China's demand remains a swing factor, with July fuel oil imports jumping 40% month-on-month to 401,000 bpd. This increase reflects refiners' preference for cheaper feedstocks amid weak margins. While this bolsters near-term demand, it masks a structural issue: China's refining overcapacity continues to distort trade flows, depressing global margins and raising risks of a product glut once domestic consumption slows.

The technical landscape for WTI and Brent crude also supports the current price levels. WTI faces stiff resistance near $65, with rallies consistently capped at that level. Support lies closer to $62.50, and a breakdown could expose $60. Brent shows relative strength, testing the $68 resistance, but risks turning lower if WTI fails to confirm.

In conclusion, the rise in WTI crude oil futures above $63 per barrel is a result of a complex interplay of supply and demand factors, geopolitical tensions, and market expectations. As the market continues to evolve, investors and financial professionals should stay vigilant to the potential shifts in storage economics and the long-term supply-demand balance.

References:
[1] https://www.tradingnews.com/news/oil-price-wti-63-usd-and-brent-66-usd