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Market Intel Archives

Oil prices moved lower, influenced by an oversupplied market

March 24, 2017

Recap: Oil prices turned lower on Thursday, weighed down by a persistently oversupplied market. May WTI traded within a 90 cent range, settling at $47.70 a barrel, down 34 cents or 0.71%, while Brent for May delivery fell 8 cents, or 0.16%, to settle at $50.56 a barrel.

With oversupply concerns increasing, calendar spreads have moved deeper into contango market conditions. This is evident in the Dec17/Dec18 WTI spread. Back in November, and prior to the OPEC agreement, this spread was trading at a $2.00 discount. Working up to and into the agreement, it traded in positive territory, peaking at $1.09. As previous doubts of adherence to the agreement grew, this spread narrowed back into negative territory, reaching a low of -$0.46, the 50% retracement of -$2.00 and $1.09, before regaining strength. With oversupply concern mounting, this spread is approaching the -$0.46 level once again. A break below this level opens up the possibility for a run at -$0.82, the 62% retracement of the above mentioned range.

April RBOB fell by 1.2 cents, or 0.8%, to $1.590 a gallon and April heating oil finished at $1.490 a gallon, down less than a cent, or 0.5%.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending March 21st increased by 672,000 barrels and by 178,000 barrels from Friday, March 17th to 70.23 million barrels.

An OPEC/non-OPEC monitoring committee meeting this weekend in Kuwait may provide the first signs of whether the agreement will continue past its June expiration.  The committee chaired by Kuwait and includes Algeria and Venezuela and non-OPEC Russia and Oman.  Saudi Arabia, which holds the rotating OPEC presidency, will also attend the meeting on Sunday.  Saudi Arabia has cut its production by 140,000 bpd below its requirement under the agreement to an average output in January-February of 9.92 million bpd.  

Meanwhile, Saudi Arabia and Russia are heading to OPEC's committee meeting this weekend, with Russia continuing its slow pace to implement its full 300,000 bpd production cut.  Saudi Arabia has publically prompted Russia to speed up and implement its full production cut by the end of the month, but Russia's Energy Minister, Alexander Novak, reiterated that it would not reach its target before April.  An analyst stated that confidence in the OPEC/non-OPEC deal is the most important tool to protect oil prices and Saudi Arabia is not expected to openly criticize Russia's compliance as it is not in their interest to scare the market. 

Industry sources stated that Saudi Arabia expects its crude oil supply to remain stable at around 10 million bpd in the next few months, fully in line with the country's OPEC quota.  Saudi Arabia has stressed the importance of focusing on its supply rather than production as supply includes crude delivered to the market, domestically and for export, from the wellhead and from storage. 

Venezuelans have been lining up for scarce gasoline across the country due to increasing problems in the country.  Venezuela has struggled with intermittent gasoline shortages in recent months, especially in the central coastal region.  Long lines were reported in the capital, Caracas and the industrial city of Puerto Ordaz.  In the eastern city of Puerto Ordaz, the problem has been increasing this week and National Guard soldiers were trying to maintain order at operational service stations.  Union leader, Ivan Freites, said Venezuelan refineries, which have been at about half capacity for months amid outages, only had oil inventories for about two days compared with a standard of 15 days.   

According to Politico, the US State Department will approve by Monday the permit needed to proceed with construction of the Canada-to-US Keystone XL oil pipeline. 


Early Market Call - as of 9:00 AM EDT

WTI - May $47.90, up 20 cents

RBOB - Apr $1.5999, up 1 cent

HO - Apr $1.4980, up 81 points 


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Oil futures fell in reaction to 5 million barrel increase in US crude oil inventories

March 23, 2017

Recap: Oil futures fell just over 2.5% in reaction to the 5 million barrel increase in U.S. crude oil inventories. Stockpiles were bolstered by a 1.1 million barrel increase in imports and rising U.S. production. May WTI slipped to $47 a barrel, marking a new 4-month low, while Brent for May delivery bottomed at $49.71, its lowest level in 4-months.

By early afternoon, prices staged a comeback, with both blends rising to new session highs on technical short covering and statements by the Saudi oil minister alluding to the possibility of Iran making cuts and an extension of the current output agreement. May WTI worked its way back over $48 a barrel, to settle at $48.04, down 20 cents, or 0.41%, while May Brent settled at $50.64 a barrel, down 32 cents, or 0.63%

April RBOB fell less than half a cent, or 0.2%, to $1.602 a gallon and April heating oil lost under a cent, or 0.4%, to $1.497 a gallon.

Fundamental NewsWhile it is unlikely that Iran would agree to cut its production, sources reported that Saudi Arabia may insist on Iran cutting its output in order to continue OPEC's output cut agreement.

Russia has not ruled out extending an OPEC and non-OPEC output cut agreement, with the final decision dependent on Saudi Arabia, according to Russia's envoy to international organizations, Vladimir Voronkov.

Goldman Sachs reported that OPEC cuts are expected to impact Gulf Coast supply in 35-45 days.  It said the cut will also have an unintended consequence of spurring shale activity, which along with a delayed delivery of the 2011-2013 capex boom, may lead to record non-OPEC output growth in 2018.

A board member at Libya's National Oil Corp, Jadalla Alaokali, said the country's oil production increased to 699,000 bpd.  He also stated that a tanker is set to load at the Es Sider port on March 26th.  Separately, Libya's NOC said the country plans to raise its output at its Sharara field by 70,000 bpd in weeks.  The fields is currently producing 221,000 bpd.  

Oman's crude oil production fell to about 883,000 bpd in January from 884,000 in December and from 923,000 bpd in October, the benchmark month from which production cuts are calculated under the OPEC agreement.

Angola exported 1.685 million bpd of crude in January, up 7% on the month.  The figure is just above its production quota of 1.673 million bpd allocated under OPEC's output cut agreement.

Genscape reported that crude storage in the ARA region increased by 7.3% or 4.06 million barrels to 59.48 million barrels in the week ending March 17th.

Kinder Morgan Texas Pipeline LLC said the Gulf Coat Express Pipeline will be in service in the second half of 2019, subject to shipper commitment.  Separately, Kinder Morgan said the open season for the TransMountain expansion was concluded.  It said firm shippers have made 15 and 20 year commitments of 707,500 bpd or about 80% on the expanded pipeline.  It said the other 20% of capacity is reserved for spot volumes as required by the National Energy Board.

IIR reported that US oil refiners are expected to shut in 1.357 million bpd of capacity in the week ending March 24th, raising available refining capacity by 385,000 bpd from the previous week.  IIR also expects offline capacity to fall to 795,000 bpd in the week ending March 31st.  


Early Market Call - as of 9:00 AM EDT

WTI - Apr $47.85, down 20 cents

RBOB - Apr $1.5825, down 1.92 cents

HO - Apr $1.4956, down 10 points 


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Spot month WTI fell to lowest level in 5 months

March 22, 2017

Recap:  Overnight gains in oil futures gave way to an early morning sell-off ahead of expiration for April WTI and the release of U.S. inventory numbers. Spot month WTI fell to its lowest level in 5 months, with the April contract reaching a low of $47.23 before severing losses for a settlement at $47.34, down 88 cents or 1.82%. May Brent settled at $50.96, down 66 cents, or 1.28%.

April RBOB slipped 0.4% to $1.605 a gallon, while April heating oil fell 0.7% to $1.503 a gallon.

Fundamental News:  According to Bloomberg, crude oil inventories at the Cushing, Oklahoma storage terminal are estimated to have increased by 1.9 million barrels to 68.4 million barrels in the week ending March 17th.

According to Goldman Sachs, new production projects and a new shale boom could increase oil production by 1 million bpd and result in an oversupply in the next couple of years.  It said OPEC will have to extend its oil output cuts in order to sustain a recovery in prices, as a revival in crude production outside the group may hinder its efforts to erode an overhang of unused inventory.  

Renewable fuel (D6) Renewable Identification Number credits increased as much as 57 cents each on Tuesday, extending Monday's rally as 2017 US biofuels requirements came into effect.

Libya's National Oil Corp hopes to raise its production at the southwestern Sharara field by 70,000 bpd from 221,000 bpd.  Sharara, which was reopened in December after the lifting of a pipeline blockade, has a potential capacity of about 330,000 bpd.

A tanker is expected to load about 1 million barrels of crude at Libya's Es Sider terminal around March 25-26.

S&P Global Platts trade flow software, cFlow, showed that about 1.06 million tons of distillates set sail from the US Gulf Coast for arrival in Europe in March.

Exxon Mobil, Royal Dutch Shell and Chevron are planning to invest a combined $10 billion this year in American shale, up from next to nothing a few years ago.  Exxon said it plans to spend one-third of its drilling budget this year on shale, with a goal to lift output to nearly 800,000 bpd by 2025, up from less than 200,000 bpd currently.  Chevron said it estimates its shale output will increase as much as 30% per year for the next decade, with production expanding to 500,000 bpd by 2020 from the current level of 100,000 bpd.

Societe Generale reported that global crude inventories are forecast to fall by 600,000 bpd in 2017, compared with a build of 400,000 bpd in 2016.  It also reported that global oil demand growth is expected to increase by 1.4 million bpd this year following an increase of 1.6 million bpd in 2016.  

Bloomberg reported that preliminary US waterborne crude imports increased by 4,900 bpd to 3.6 million bpd in the week ending March 16th.  Total crude and product imports fell by 17,200 bpd to 4.9 million bpd.

IHS data showed that crude and refined product shipments from the US Gulf fell to 3.91 million metric tons on 100 ships in the week ending March 16th. 


Early Market Call - as of 9:00 AM EDT

WTI - Apr $47.72, down 52 cents

RBOB - Apr $1.6042, down 11 points

HO - Apr $1.4943, down 90 points 


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Oil prices fell despite support from OPEC to extend output cuts

March 21, 2017

RecapDespite OPEC showing signs of support in favor of extending the recently agreed upon output cuts, oil prices fell, giving up gains made last week. WTI for May delivery fell 40 cents, or 0.81%, settling at $48.91. Brent for May delivery settled at $51.62, down 14 cents or 0.275.

Continued bias toward an oversupplied market is evident in the front month spread. The soon to expire, April WTI, settled at a 69 cent discount to May, its weakest settlement since the middle of January and close to its weakest level of -72 cents.  Since settling below the long standing trend line that can be depicted on a spot continuation chart, WTI has fallen into a $2.53 cent range, while remaining below this line. Slow stochastics have moved out of overbought territory and are pointing to the upside.

April RBOB rose 0.8% to $1.611 a gallon, while April heating oil finished up by 0.4% to $1.514 a gallon.

Fundamental NewsAccording to sources, OPEC producers increasingly support the extension of its oil supply cut into the second half of the year.  However, they stated that non-OPEC participation is needed.  An OPEC delegate said an extension is needed to balance the market and any extension of the agreement should be with non-OPEC producers.  OPEC is scheduled to meet on May 25th in Vienna to decide output policy.  There will also be a gathering in May of OPEC and non-OPEC producers.

The Joint Organization Data Initiative reported that Saudi Arabia's crude oil exports fell by 3.8% to 7.713 million bpd in January, while its crude production fell by 717,000 bpd to 9.748 million bpd.

Libya's oil ports of Es Sider and Ras Lanuf are resuming operations and preparing to export crude after a two-week halt in shipments due to military clashes.  Staff are returning to work at Es Sider and Ras Lanuf ports and exports are set to restart in a week to ten days.  Libya's National Oil Corp said the country's production increased to 646,000 bpd from a previous level of 620,000 bpd.  NOC's Chairman, Mustafa Sanalla, said it has been coordinating with military forces from eastern Libya and has no reason to believe it will not regain control of the Es Sider and Ras Lanuf oil ports.  NOC aims to increase national production to 800,000 bpd by the end of April.  

According to energy lender, Arab Petroleum Investment, a historic agreement between OPEC countries and non-OPEC producers to reduce their output will not be enough to increase crude prices above $60/barrel this year.  It believes the process of balancing the market will take at least until the second half of 2017.

JP Morgan cut its 2017 WTI forecast to $53.75/barrel and its 2018 estimate to $53.50/barrel. It also lowered its price forecasts for 2017 and 2018 to $55.75/barrel and $55.50/barrel for Brent crude, respectively.

Societe Generale forecast the price of WTI in 2017 and 2018 at $56.70/barrel and $62.50/barrel, respectively.  It also forecast the 2017 price of Brent at $58.90/barrel and the 2018 price at $65/barrel.

IIR reported that US oil refiners are expected to shut in 973,000 bpd of capacity in the week ending March 24th, raising available refining capacity by 719,000 bpd in the previous week.  IIR expects offline capacity to fall to 732,000 bpd in the week ending March 31st. 


Early Market Call - as of 9:00 AM EDT

WTI - Apr $48.40, up 15 cents

RBOB - Apr $1.6185, up 72 points

HO - Apr $1.5215, up 76 points 


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Oil futures closed unchanged despite possible output cut extension

March 20, 2017

Recap: Oil futures finished close to unchanged, as they were unable to gain momentum on statements by the Saudi Oil Minister referencing a possible extension of the output cuts imposed by OPEC and non-OPEC members. The U.S. oil rig count, which rose by 14 to a total of 631, worked to keep a lid on prices. Activity was quiet, with both blends trading in a narrow range. April WTI settled up 3 cents to $48.78 a barrel, ending the week's trading about 0.6 percent higher. May Brent settled at $51.76 a barrel, up 2 cents on the day and up 0.75 on the week.

April RBOB finished up half a cent to $1.599 a gallon-less than 0.1% lower for the week, while April heating oil rose less than half a penny to $1.509 a gallon, ending the week up about 0.3%.

Fundamental NewsAccording to Oil Movements, OPEC's oil shipments will increase by 270,000 bpd to 24.1 million bpd in the four week period ending April 1st.

Saudi Arabia's Oil Minister, Khalid Al-Falih, said OPEC and its allies may prolong production cuts after they expire in June if the world's crude inventories remain above the five year average.  OPEC is scheduled to meet on May 25th to decide whether to continue its production cuts.  He said the strategy is moving global markets in the "right direction" and fundamentals have improved considerably.  He also stated that OPEC's partners are fully committed to cutting output.  In the US, higher oil prices triggered by the OPEC agreement has prompted investment in the shale industry, potentially signaling another production boom that could undermine OPEC's goal of rebalancing the market.  However, he stated that he has made it clear that excessive production out of shale plays cannot be absorbed by the global market. 

The joint OPEC/non-OPEC technical committee estimates that OPEC members in February have delivered 106% of their pledged oil output cuts.  An industry source said eleven non-OPEC producers that joined the agreement to cut production delivered 64% of promised cuts in February. 

Russia's Energy Minister, Alexander Novak, said Russia will cut output by 300,000 bpd by the end of April and will maintain production at that level until the global oil output cut agreement expires at the end of June.  Russia had cut output by 160,000 bpd by mid-March. 

Baker Hughes reported that the number of rigs searching for oil in the US increased by 14 in the past week to 631. 

The Interior Department is considering Eni's request to explore for oil in waters north of Alaska.  Eni's exploration well would be in an area it previously leased from the federal government and is not covered by an executive order former President Barak Obama issued in December to block the sale of new drilling rights within parts of the Chukchi and Beaufort seas.

Energy Aspects reported that peak global refinery maintenance of 7.32 million bpd in March is weighing on physical grades, particularly light sweet crudes.   

IIR reported that US oil refiners are expected to shut in 1.658 million bpd of capacity in the week ending March 17th, increasing refining capacity by 47,000 bpd on the week.  IIR expects offline capacity to fall to 939,000 bpd in the week ending March 24th and to 732,000 bpd in the following week. 

Early Market Call - as of 9:00 AM EDT

WTI - Apr $48.05, down 74 cents

RBOB - Apr $1.5878, down 1.08 cents

HO - Apr $1.5004, down 82 points

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Weakness in dollar and EIA report caused oil futures to open higher

March 17, 2017

Recap: Oil futures opened higher on Thursday, supported by weakness in the dollar and Wednesday's EIA report. Gains were quickly erased as it became apparent U.S. stockpiles remain at session levels despite efforts by OPEC and some non-OPEC producers to peel away at the global supply excess. April WTI settled at $48.75 a barrel, down 11 cents, or 0.23%. Brent for May delivery slipped 7 cents, or 0.14%, to settle at $51.74 a barrel.

April RBOB rose 0.2% to $1.589 per gallon, while April heating oil fell 0.3% to $1.508 a gallon.

Fundamental NewsThe EIA reported that OPEC's production cuts are finally being felt in the US, as crude imports from three of the group's largest Middle East producers fell in the week ending March 10th.  Imports from Saudi Arabia fell by 28% to 1.08 million bpd last week. Deliveries from Iraq fell by 57% while deliveries from Kuwait fell by 72% last week.  The declines from the Middle East helped cut total US Gulf imports to 2.69 million bpd.

Iraq's Oil Minister, Jabbar Al-Luaibi, said the country pumped 4.57 million bpd of oil in February and plans to increase its output later in the year, even as the OPEC member reaffirmed its commitment to the group's decision to cut production.  The country plans to increase output to 5 million bpd by the end of 2017.  Iraq exported 3.87 million bpd from its southern and northern terminals in February. 

Egypt aims to resume importing oil products from Saudi Aramco by the end of March or early April.  Egypt's Petroleum Minister, Tarek El Molla, said a deal to import crude from Iraq would remain in place as it was not a replacement for Saudi oil shipments which were halted last October.  Saudi Arabia agreed in April 2016 to provide Egypt with 700,000 tons of refined oil products per month for five years, though the cargoes stopped arriving in early October.      

Russia's Lukoil expects oil prices to remain around $55/barrel in 2017.  Lukoil's Chief Executive, Vagit Alekperov, said it would be expedient to extend the deal to crude global oil output.  Separately, he stated that Lukoil's oil production was down by 2,500 tons/day by mid-March. 

The European Parliament rejected a call to ban Arctic oil and gas exploration on Thursday.  Lawmakers voted 414-180 to reject the non-binding motion that called for the European Commission and member states to work with international forums towards a future total ban on the extraction of Arctic oil and gas.  The European Parliament did, however, endorse a call to ban oil drilling in the region's icy waters. 

RBC sees oil prices rising to about $60/barrel in the fourth quarter. 

Fitch's BMI Research said OPEC compliance has been strong and loading data for March suggests the trend will continue as increased field maintenance curbs production and support prices. 

Deutsche Bank expects OPEC cuts to be extended until the end of 2018 to prevent a build-up in inventories. 

According to International Enterprise Singapore, the country's residual fuels stocks fell by 805,000 barrels to 26.929 million barrels in the week ending March 15th.  Singapore's light distillates stocks increased by 335,000 barrels on the week to 14.266 million barrels, while its middle distillates stocks fell by 140,000 barrels to 12.878 million barrels on the week. 

Early Market Call - as of 9:00 AM EDT

WTI - Apr $49.08, up 33 cents

RBOB - Apr $1.6070, up 1.29 cents

HO - Apr $1.5153, up 1.10 cents 

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Oil prices rose after unexpected decrease in U.S. crude oil inventories

March 16, 2017

Recap: Oil prices held on to early gains, stemming the week long streak of losses, after the EIA reported an unexpected decrease in U.S. crude oil inventories. According to its report, the EIA showed U.S. crude oil stocks fell 237,000 barrels. Analysts had expected an increase of 3.7 million barrels.  Larger than expected draws in product stocks pushed oil prices higher as well. Gasoline stocks fell 3.1 million barrels, with expectations call for a decrease of 2 million. Distillate stocks dipped 4.2 million barrels, much larger than the estimated 1.7 million barrel draw.

April WTI tacked on $1.14, or 2.39%, to settle at $48.86 a barrel and  May Brent gained 89 cents, or 1.75%, to settle at $51.81 a barrel.

April RBOB finished basically unchanged at $1.583 a gallon, while April heating gained 2.1 cents, or 1.4%, to $1.512 a gallon.

Fundamental NewsThe IEA reported the global oil inventories increased for the first time in six months in January, despite OPEC's production cuts.  However, it added that if the group maintains its output limits, the market may move into a deficit in the first half of 2017.  It said compliance by OPEC with its agreed output cuts of 1.2 million bpd in the first half of the year was 91% in February and if the group maintains its limit until June, the market could show an implied deficit of 500,000 bpd.  It reported that Saudi Arabia's oil production increased by 180,000 bpd to 9.98 million bpd.    Non-OPEC crude production increased by 90,000 bpd in February to 57.8 million bpd, as increasing US output offset declines elsewhere.  In regards to the US, the IEA said the continued increase in US crude exports will depend on the development of the country's coastal infrastructure.  The IEA said OECD crude stocks in January increased for the first time since July by 48 million barrels to 3.03 billion barrels.  The IEA also maintained its global demand growth forecast of 1.4 million bpd for 2017. 

Iran's Oil Minister, Bijan Namdar Zanganeh, said Iran will cap its oil output at 3.8 million bpd if OPEC extends its cuts.

Iraq's Oil Ministry spokesman, Asim Jihad, said the country remains committed to a global agreement by OPEC and non-OPEC producers to reduce oil supply to stabilize the market.  Iraq's total oil production fell to 4.566 million bpd in February from 4.63 million bpd in January.  Meanwhile, Iraq's total oil exports in February totaled 3.869 million bpd in February. 

Iraq's South Oil Co said oil exports from the country's southern ports averaged 3.2 million bpd in the first half of March.      

Saudi Aramco will resume oil product shipments to Egypt five months after the exports were halted. 

Libya's eastern parliament said it was cancelling an agreement to unify the country's National Oil Corp, a day after eastern forces recaptured the ports of Es Sider and Ras Lanuf from a rival faction. 

TransCanada Corp plans to build a new crude oil storage facility in Cushing, Oklahoma in partnership with M2 Infrastructure LLC.  The facility will be able to store 6.2 million barrels of crude and will be located at TransCanada's terminal in Cushing.  The deal between TransCanada and M2 includes an option to build up to 20 million barrels of storage. 

IIR reported that US oil refiners are expected to shut in 1.581 million bpd of capacity in the week ending March 17th, raising available refining capacity by 225,000 bpd from the previous week.  IIR expects offline capacity to fall to 877,000 bpd in the week ending March 24th. 


Early Market Call - as of 9:00 AM EDT

WTI - Apr $49.13, up 27 cents

RBOB - Apr $1.5934, up 1.07 cents

HO - Apr $1.5169, up 48 points


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Oil prices plummeted on news that Saudi oil production rose in February

March 15, 2017

Recap:  Oil prices plummeted for the seven straight session on reports that Saudi oil production for the month of February was pegged at 10.11 million barrels per day, up from 9.748 million in January. Substantial growth in U.S. production based on a year-on-year basis also weighed on prices. April WTI fell 68 cents, or 1.40%, to settle at $47.72 a barrel. Brent for May delivery slipped 43 cents, or 0.84%, to settle at $50.92 a barrel. 

April RBOB gained less than half a cent, settling at $1.5825 a gallon, while April heating oil fell under a penny to $1.4919 a gallon.

Fundamental News:  In its monthly report, OPEC said its production in February fell by 139,500 bpd to 31.96 million bpd.  The decrease was largely driven by Saudi Arabia, which cut 68,100 bpd to 9.8 million bpd.  Meanwhile, Iraq, which is reluctant to join the effort to cut production because it says it needs to raise money in its fight against the Islamic State militant group, is producing 63,000 bpd above its allocation.  Iraqi production fell by 62,000 bpd in February to 4.414 million bpd.  OPEC said that the rise in oil prices triggered by the OPEC-led production cuts has in turn encouraged increased output by non-OPEC producers.  Non-OPEC supply is expected to increase by 400,000 bpd, reflecting an upward revision of 160,000 bpd from a previous forecast.  OPEC reported that oil stocks in industrialized countries increased in January to 278 million barrels above the five year average, of which the surplus in crude was 209 million barrels and the rest refined products.

Saudi Arabia's Energy Ministry said the country's oil supply was little changed in the past two months and in line with OPEC output cut targets.  Saudi Arabia's oil production increased to 10.011 million bpd in February, up 263,000 bpd on the month.  It reported that the amount of crude supplied to the market in February fell to 9.9 million bpd from 9.99 million bpd in January. 

Iran's Oil Minister, Bijan Namdar Zanganeh, said the country will keep its oil production cap at 3.8 million bpd in the second half of 2017, provided other OPEC members stick to the output level they agreed in November. 

East Libyan forces launched a ground offensive on Tuesday and regained control of the oil port of Ras Lanuf and Es Sider.  The eastern-based Libyan National Army mobilized ground forces and carried out air strikes as it attempted to retake Ras Lanuf and Es Sider from a rival faction known as the Benghazi Defence Brigades. 

Investments by Norway's oil industry will fall more than expected in 2017 and economic growth is now seen slightly lower than forecast.  Norway's Finance Ministry also stated that a rise in the price of crude and costs by the oil industry have reduced the risk of a major economic setback.  Oil and gas firms are now expected to cut investment by 11.6% on the year, compared with an October forecast of a 10% decline.  The government now predicts an average oil price of 479 Norwegian crowns or $55.90/barrel in 2017, up from an earlier forecast of 425 crowns and above the 379 crowns per barrel earned in 2016. 

South Korea's Korea Customs Service reported that the country imported 1.6 million tons or 12 million barrels of crude from Iran in February, up 53.5% from a year ago.

Early Market Call - as of 9:00 AM EDT

WTI - Apr $48.49, up 78 cents

RBOB - Apr $1.5981, up 1.44 cents

HO - Apr $1.5095, up 1.76 cents 


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Oil futures fell for sixth consecutive session

March 14, 2017

Recap:  Oil futures fell for the sixth consecutive session as hedge funds continue to unwind length. As of last Monday, prices had fallen over 8%, marking the largest week on week sell-off in four months. April WTI settled at $48.40 a barrel, down 9 cents, or 0.2%, while Brent for May delivery fell 2 cents, 0.04%, to settle at $51.35 a barrel.  

April RBOB settled down 1.9 cents, or 1.2%, at $1.581 a gallon and April heating oil fell less than half a cent, or 0.2%, to $1.501 a gallon.

Fundamental News:  According to Genscape, crude oil stored in Cushing, Oklahoma increased by 1.7 million barrels in the week ending March 10th to 68.5 million barrels.

Kuwait's Oil Minister, Essam Al-Marzouq, said the country wants to extend a global deal to cut oil supply beyond June to rebalance the market and bring crude prices to an acceptable level.  He said preliminary data was "very positive" and showed that compliance with the deal in February had increased to 95% from 91%.

Iranian Communications Minister, Mahmoud Vaezi said at the start of a meeting with Russia's Energy Minister, Alexander Novak, that they would discuss a deal to supply Russia with 100,000 bpd of Iranian crude oil.

Russia's Rosneft said that while the output cut deal showed its sustainability and was fulfilled by more than 90%, there was a risk that a global oil output cuts deal would not be extended because of a lack of will on the part of the main participants and due to shale production dynamics in the US.  It said a recovery in US oil output may deter OPEC and non-OPEC producers from extending production cuts beyond June and may lead to a new price war.

Libya's National Oil Corporation will likely declare force majeure at the terminals of Es Sider and Ras Lanuf if clashes continue.  Libya's eastern-based Libyan National Army lost control of Es Sider and Ras Lanuf to a rival faction 10 days ago.  Both sides have been mobilizing since then, and the LNA has been conducting daily air strikes in the area.  An NOC board member said Libya's oil output stood at just over 615,000 bpd, down from about 700,000 bpd before the conflict around the oil ports broke out.

Iran's Kharg oil terminal reached a record loading of 6.6 million bpd.

Iraq is in talks with US companies including ExxonMobil to develop oil infrastructure projects in the country.

Plains All American Pipeline returned its Wahsatch crude oil pipeline to service late Friday.  Plains shut down the pipeline on February 10th as a precautionary measure due to indications of soil movements in a mountainous area.

Reuters reported that a record 9.4 million barrels of US crude is scheduled to discharge in Asia in April.

Barclays analyst, Michael Cohen, said that with oil prices close to or below $50/barrel, OPEC's agreement to cut output has a higher probability of extension.  

IIR reported that US oil refiners are expected to shut in 1.58 million bpd of capacity in the week ending March 17th, raising available refining capacity by 299,000 bpd from the previous week.  IIR expects offline capacity to fall to 772,000 bpd in the week ending March 24th.   


Early Market Call - as of 9:00 AM EDT

WTI - Apr $47.62, down 79 cents

RBOB - Apr $1.5707, down 1.01 cents

HO - Apr $1.4865, down 1.35 cents 


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Global supply glut pushed oil futures lower for 5th straight day

March 13, 2017

Recap:  Oil futures fell for the 5th straight day on mounting concern that the global supply glut still persists despite efforts by some of the world's largest producers to reduce it. Adding pressure to this, the market had its 8th sequential week of increases in the U.S. oil rig count. According to Baker Hughes, the number of operating rigs rose by 8, to 617 rigs.       

April WTI fell 79 cents, or 1.60%, to settle at $48.49 a barrel. This marks a loss of 9.1% on the week. May Brent settled at $51.37 a barrel, down 82 cents, or 1.57%, for a weekly decline of 8.10%.

April RBOB fell 2.4 cents, or 1.5%, to $1.600 a gallon, for a weekly loss of 3.2%, while April heating oil fell 2.6 cents, or 1.7%, to $1.504 a gallon, ending down roughly 5.7% for the week.

Fundamental News:  Baker Hughes reported that the number of rigs drilling for oil in the US increased by eight in the past week to 617. 

The UAE's Energy Minister, Suhail al-Mazrouei said the UAE will comply fully with its OPEC commitment to reduce oil production by more than 139,000 bpd in March and April due to maintenance activities.

Russia's Energy Minister, Alexander Novak, said Russia has so far cut its oil output by 156,000 bpd as part of a deal between OPEC and non-OPEC countries to support oil prices.  He also said that Russia was ahead of schedule with its portion of the output cuts and that oil stocks on world markets would fall.  

Petrologistics reported an increase of 427,000 bpd in OPEC supply in February.  The group's 13 members supplied an average of 32.494 million bpd. 

Oil refiners paid a record of over $2 billion to meet US biofuels requirements in 2016, a 68% increase that helps fuel a debate over who should shoulder the costs for meeting environmental regulations.  According to a Reuters review of regulatory filings from ten refiners, including Valero Energy Corp and CVR Energy Inc showed that they paid $2.22 billion last year for compliance credits that companies use to prove they are meeting annual government requirements for volumes of biofuels to be blended with gasoline and diesel.

Royal Dutch Shell has bought only three cargoes of Iranian oil since sanctions were lifted a year ago, a small fraction of what it used to buy and an indication of the legal difficulties and high prices that still hamper the trade. 

The head of Vitol, Mike Loya, said oil production in the Permian shale will increase by 600,000 to 700,000 bpd in the year through December. 

Morgan Stanley forecast the average price of Brent at $57.20/barrel in 2017 and 2018.  It believes a drawdown of global inventories from the second quarter of 2017 onwards will likely drive Brent prices to rally to $62.50/barrel by the end of 2017.  Brent crude prices are seen reaching $70/barrel by the end of 2019 and to $75/barrel by the end of 2020. 

Citigroup analysts forecast that US oil production is seen rising by 1 million bpd by the fourth quarter.  The bank also raised its 2017 rig count forecast by 3% to 822 and said shale capex will increase by 80% in 2017. 

IIR reported that US oil refiners are expected to shut in 1.862 million bpd of capacity in the week ending March 10th, cutting available refining capacity by 237,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.556 million bpd in the week ending March 17th and to 826,000 bpd in the following week. 


Early Market Call - as of 9:00 AM EDT

WTI - Apr $48.43, down 6 cents

RBOB - Apr $1.5850, down 1.51 cents

HO - Apr $1.5082, up 49 points


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