Energy Market Story: Crude Retreats as Profit-Taking Caps Trade-Driven Surge

The energy market on Tuesday, June 10, 2025, saw West Texas Intermediate (WTI) crude oil surge to a two-month high of $66.64 before retreating to $65.18, down 0.70%, while Brent crude hit $68.00 but settled at $67.03, down 0.62%. Natural gas faced pressure, sliding 2.13% toward $3.50. Optimism from US-China trade talks in London and a robust US jobs report drove early gains, but profit-taking and rising global inventories tempered the rally, setting the stage for volatility ahead of key US data.

Trade Talks Lift Oil, But Momentum Fades

US-China trade negotiations in London, bolstered by positive remarks from US President Donald Trump and Commerce Secretary Howard Lutnick, sparked hopes of eased export restrictions and increased rare earth supplies, boosting oil demand expectations. WTI climbed above $64.00, supported by a 3.3-million-barrel drawdown in US crude inventories last week and improved business confidence, with the NFIB Business Optimism Index rising to 98.8 in May from 95.8. However, profit-taking emerged as traders locked in gains, pushing WTI below $66.00 and Brent below $67.50, reflecting caution over unresolved trade outcomes and China’s 35% export drop to the US in May.

Geopolitical Risks and Supply Dynamics

Geopolitical tensions, including Iran’s nuclear standoff and Russia’s actions in Ukraine, underpinned oil’s earlier surge, with posts on X noting fears of supply disruptions. OPEC+’s plan to increase output by 411,000 barrels per day in July, led by Saudi Arabia and Russia, adds pressure, with global inventories expected to rise by 0.4 million barrels per day in 2025, per the EIA. This supply growth, coupled with weaker demand from China and a revised global growth forecast of 1.5% for 2025, contributed to the late-day retreat as markets reassessed bullish bets.

Natural Gas Faces Demand Challenges

Natural gas prices fell toward $3.50, pressured by mild weather forecasts reducing demand. The Henry Hub spot price, down to $3.44 in April, is expected to climb to $4.20 in Q3 2025 due to rising LNG exports and seasonal power sector demand. However, a projected 3% decline in US natural gas-fired generation in 2025, driven by higher prices and a 34% surge in solar generation, limits upside potential, keeping prices volatile.

What’s Next for Energy Markets?

Wednesday’s US CPI data, forecasted to show headline inflation at 2.5% year-over-year, and the API’s weekly stockpile report, expected to show a 0.7-million-barrel increase, will shape the next moves.

A hotter CPI could strengthen the US Dollar, pressuring WTI toward $62.50-$63.00, while a softer print might sustain risk-on sentiment, targeting $68.00. Brent faces resistance at $67.00-$67.50, with support at the 50-day moving average of $65.16. Natural gas could test $3.35-$3.40 if bearish momentum persists. Trade talk progress and geopolitical risks will keep markets on edge, with profit-taking likely to cap near-term gains.