European Oil Report - 5 July

Welcome to the European oil report, for week ending 5 July 2026. We will focus on Brent, spreads, crude supply, refinery demand, inventories and major news.

Price Review

Brent settled at 72.12 USD/bbl on Friday 3 July 2026, up 0.18% week-on-week from the previous week’s settlement of 71.99 USD/bbl. Price remains quite stable.

WTI settled at 68.78 USD/bbl. The Brent-WTI spread widened by 21% this week, from 2.76 USD to 3.34 USD.

Gasoline settled at 2.9531 USD/gal, down 0.14% week-on-week. Heating Oil settled at 3.2566 USD/gal, up 1.51% week-on-week.

ICE Gasoil vs Brent spread widened by 4.36% week-on-week, from 44.96 USD to 46.92 USD. Gasoline vs Brent spread narrowed by 4.45% week-on-week, from 31.89 USD to 30.47 USD.

Crude Supply

OPEC reported a jump in oil output in June. Kuwait had a sharp increase in output, from 580,000 bpd in May to 1.65 million bpd in June and still rising. OPEC+ has agreed to further increase its output, a raise of 188,000 bpd from August. Production rises, but the Gulf exports are still at pre-war levels. Rise in output from OPEC+ is a bearish indicator.

The non-OPEC oil supply gives an image of a stable market:

·       The most recent estimate of US crude oil production was published for 26 June 2026. Production was 13.81 mbpd, down only 0.065% from 19 June. US production remains stable.

·       US rig count increased by 7, to 580, from the previous week. Rig count is a major indicator of future production, and this increase in the count indicates a future rise in production in the US but doesn’t affect next week.

·       Oil output of Canada and Brazil remain stable.

Overall, the supply section gives a slightly bearish view.

Refinery demand

European refineries are running at very low levels, and many refineries are running at a loss. The refinery demand is down due to an extreme crude-led squeeze, caused by the US-Iran conflict. The conflict seems to be over, so the refinery demand is expected to rise. Bullish indicator for the near future.

Inventories

US Commercial Crude Oil stock is at 408.4 million bbl, down 3.8% week-on-week, and 2.5% less than for the same date last year. Strategic Petroleum Reserve is at 325.7 million bbl, down 5.5% week-on-week, and 19.1% less than for the same date last year. Inventories are low and are still being drawn – bullish indicator.

European inventories are also at the extreme low, lowest levels recorded since 1990. The low levels are explained by the crisis in the Middle East. Bullish indicator.

Major news

OPEC+ is increasing their output, as mentioned earlier. Output is still at the pre-war levels but is quickly rising. The global supply is slowly returning to the pre-war levels, which is a bearish indicator.

CME Group is planning to launch 10-barrel WTI contracts. This will lead to a slight increase in the volatility of the oil prices, since more traders will enter the market.

Citi forecasts that Brent could fall to 60 USD by Christmas. The bank’s analysts say that both the US and Iran have good reasons to uphold the ceasefire and thus there won’t be new supply shocks. This expectation is below the market consensus, with the median expectation being 78 USD/bbl by the end of 2026.

Balance Table

Total count: 1.0 point, indicating a slightly bullish market. In the short term, Brent is expected to rise.

The key question is whether the supply shock of the US-Iran war is completely over. If the two countries will once again begin to build up tension, we will see a strongly bullish market again. Brent remains sensitive to geopolitical news.