By Giulia Petroni
Here's a look at what happened in oil markets in the week of June 1-5 and what the focus will be in the days to come.
OVERVIEW: Oil prices trade lower on Friday but are still headed for a weekly gain as stalled U.S.-Iran negotiations and fresh hostilities in the region dampen hopes for an imminent deal to reopen the Strait of Hormuz. Brent crude, the international oil benchmark, was above $93 a barrel, while West Texas Intermediate futures were around $91 a barrel.
MACRO: The latest U.S. data revealed strong job gains in May, raising concerns over potential interest-rate hikes later this year. "Providing the labour market does not suffer a dramatic summer jobs scare again, then it looks increasingly likely that the FOMC will enact a couple of insurance hikes later this year," said Stephen Brown from Capital Economics.
Some Fed officials already suggested in recent days that the central bank should be prepared to raise rates.
GEOPOLITICAL RISKS: U.S.-Iran talks showed little progress, with fresh strikes between the two sides this week raising concerns among market participants and pushing prices higher. President Trump, however, told aides he would consider ending the ceasefire with Iran if Tehran killed American troops.
Meanwhile, Hezbollah rejected a U.S.-brokered agreement between Israel and the Lebanese government to halt fighting, while Israel said it would continue its offensive in southern Lebanon.
"The oil market continues to trade on expectations of an imminent resumption in energy flows from the Persian Gulf," analysts at ING said. "This leaves significant upside risk as inventories fall and we move closer towards the stronger demand period of the third quarter."
SUPPLY AND DEMAND: Brent's gains have been capped by oil inventories lasting longer than expected, rerouted exports and falling demand, according to market watchers.
Global inventories have provided a cushion for the market and are likely to continue tightening into the third quarter, leaving upside risk to prices, according to analysts. "Without a normalisation of regional oil flows, the market is increasingly exposed to sharp upward swings as inventories continue to thin," ING's Warren Patterson and Ewa Manthey said.
Meanwhile, U.S. commercial crude oil stocks fell by 8 million barrels last week as export demand remains high, with an additional 8 million barrels released from the Strategic Petroleum Reserve.
WHAT'S AHEAD: Next week's focus will be on a series of key oil market and macroeconomic releases.
The Energy Information Administration will publish its monthly Short-Term Energy Outlook, providing updated forecasts for global oil supply and demand. While higher oil prices have recently supported a pickup in drilling activity, it remains uncertain whether the EIA will significantly revise higher its U.S. crude production outlook, according to Commerzbank analysts.
On Thursday, OPEC's monthly report is set to be released, with the cartel expected to continue projecting solid demand growth this year. The IEA's report will come out the following week.
Meanwhile, market participants will closely monitor Chinese foreign trade data, particularly crude oil imports and refined product exports. China's seaborne crude imports have recently fallen to a ten-year low, easing competition for available barrels in Asia and contributing to narrower crude and product price differentials. A further decline in May imports could add downward pressure to oil prices.
On the macro side, attention will turn to Wednesday's U.S. CPI release, followed by producer price inflation and consumer sentiment data later in the week, which could influence expectations for the Fed and broader risk sentiment.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
June 05, 2026 12:01 ET (16:01 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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