Recap: After the oil market posted an inside trading day on Friday, the market breached its previous range and posted an outside trading day on Monday. The market traded to $50.33 in overnight trading, breaching a previous high of $50.13, early in the session before it gave up any of its gains. It breached its previous low and retraced almost 38% of its move from a low of $47.00 to a high of $50.50, as it sold off to a low of $49.19 by mid-day. The market, however, bounced off its low and rallied back towards the $50 level ahead of the close. The October WTI contract settled at $49.91, up 2 cents, while the November Brent contract settled at $55.48, down 14 cents. Meanwhile, the product markets ended the session mixed, with the heating oil market settling down 1.92 cents at $1.7796 and the RBOB market settling up 69 points at $1.6686.
Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending September 15th increased by 675,812 barrels on the week and by 86,656 barrels from Tuesday, September 12th to 62,002,800 barrels.
According to the Joint Organizations Data Initiative, Saudi Arabia’s crude oil exports in July fell to 6.693 million bpd from 6.889 million bpd in June. Saudi Arabia’s crude oil production fell by 60,000 bpd on the month to 10.01 million bpd in July. Meanwhile, its crude stocks fell by 844,000 barrels to 255.706 million barrels in July. Saudi Arabia’s domestic crude throughput increased by 110,000 bpd to 2.687 million bpd in July.
Royal Dutch Shell declared force majeure on exports of Nigeria’s Bonny Light crude due to the shutdown of one of the two export pipelines. The force majeure declaration went into place on September 16th following the shutdown of the Nembe Creek Trunk Line.
Colonial Pipeline said that Port Arthur, Texas refiners can use their own pumps as a temporary solution to get gasoline and other products into its main lines. Traders said that while Colonial’s move may help resume shipments from Port Arthur, flow rates through the line overall would still likely remain low until repairs are complete. Repairs at the Port Arthur injection point are expected to last through the end of the month.
Bloomberg reported that total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle increased by 85% on the week to 1.12 million bpd in the week ending September 14th. It reported that exports from Houston increased by 191% to 983,637 bpd.
JBC Energy said the price of Brent crude may rise to $60/barrel on sentiment and a short squeeze, but sustaining the price at that level is a different story, with fundamentals justifying prices between $50-$55/barrel.
The EIA stated that shale oil production from seven major US oil plays is expected to see a monthly increase of 79,000 bpd to 6.083 million bpd. Oil output from the Permian Basin is expected to see the largest increase, with an increase of 55,000 bpd. Oil output at Eagle Ford shale play is expected to fall by 9,000 bpd.
ExxonMobil Corp may restart most of the production units at its 362,300 bpd Beaumont, Texas refinery by the end of the week after the refinery was shut on August 30th due to Hurricane Harvey. The refinery’s two crude distillation units resumed operations on Friday. It also restarted its 40,000 bpd diesel hydrotreater. Its 65,000 bpd hydrocracking unit was restarted on Sunday. The refinery’s 45,000 bpd coking unit is expected to achieve full production levels by the last week of September.
Early Market Call - as of 9:00 AM EDT
WTI - Oct $50.30, up 40 cents
RBOB - Oct $1.6659, down 32 points
HO -Oct $1.7888, up 89 points
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