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Market Intel Archives

Oil prices rose as Russia announced it was prepared to join OPEC in curtailing output

October 11, 2016

Recap: Oil prices on both sides of the Atlantic rose on Monday as Russia announced it was prepared to join OPEC in curtailing output. Brent for December delivery touched $53.73, its highest level since October 12, 2015, before shedding gains to settle at $53.14, up $1.21, or 2.3%. November WTI peaked at $51.60 before paring gains to settle at $51.35, up $1.54, or 3.1%. Both blends settled at their highest level in a year.

November RBOB tacked on $1.54, or 1%, to close at $1.4972 a gallon, while November heating oil added about 3.09 cents, or 2%, at $1.6102 a gallon.

Fundamental News:  Saudi Arabia's Energy Minister, Khalid al-Falih, said that OPEC should not constrain oil supply too tightly and added that he was optimistic a global production deal to limit supplies could be reached by November.  He said OPEC needed to behave in a balanced and responsible manner and that he continued to believe in its important role.  He said he would meet with Russia's Energy Minister, Alexander Novak, in Istanbul in the coming days to discuss Russia's reaction to the Algiers agreement.  He also said that a technical committee meeting between OPEC members and non-OPEC countries would take place in two weeks.

OPEC's Secretary General, Mohammed Barkindo, said a sharp decline in investments poses a threat to global oil supply.  He said oil investments were projected to contract 22% this year and added that next year was looking bleak.

Algeria's Energy Minister, Nouredine Bouterfa, said he expects to see commitments on supply cuts from non-OPEC producers at gatherings in Istanbul. 

Russia's President, Vladimir Putin, said Russia is ready to join a proposed cap on oil output by OPEC members.  He said that low oil prices have led to underinvestment in the global energy sector which will turn into a deficit at some point and trigger new unpredictable increases in prices.  He added that he hoped that OPEC members would confirm the decision to adopt quotas for output when the organization meets in November.  Separately, Russia's President said Russia will continue investing in oil production and will remain a reliable energy supplier to the world market despite the country's current difficulties.   

Russia's Energy Minister, Alexander Novak, said Russia will consider a proposal from OPEC to cut output if such a proposal is made.  However, he stated that Russia would prefer to freeze its production.   

Venezuela's President, Nicolas Maduro, said global oil prices need to be more fair and realistic to encourage investment and added that OPEC members should reach an agreement to bring price stability.  He said he hoped an agreement could be reached at a meeting of energy ministers next Wednesday and that Venezuela was ready to be part of any alliance among producers.

Vitol's Chief Executive, Ian Taylor, said the oil market may see supply and demand rebalance if OPEC and Russia deliver a meaningful production cut.  However, he added that it may take until the second half of 2017.  He said that while the price would be supported by a cut of 1 million bpd, he was unsure OPEC members could agree on who should cut and by how much.

IIR reported that US oil refiners are expected to shut in 1.403 million bpd of capacity in the week ending October 14th, cutting available refining capacity by 79,000 bpd from the previous week.  It also reported that it expects offline capacity to fall to 1.3 million bpd in the week ending October 21st.  

Early Market Call - as of 9:00 AM EDT

WTI - Nov $51.27, down 8 cents

RBOB - Nov $1.4972, unchanged

HO - Nov $1.6056, down 46 points 

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Oil prices struggled to maintain highs through a sell-off on Friday

October 10, 2016

Recap: WTI encountered difficulty in maintaining strength above the $50 a barrel level on Friday, as traders took light profits ahead of the weekend. Despite Friday's sell-off, both WTI and Brent maintained more than 11% of gains made after OPEC's meeting in Algiers. Just prior to the meeting, WTI was trading at $44.67, and settled this week at $49.81, for a gain of $5.14. Its European counterpart was trading at $46.52, settling at $51.93 on Friday, up $5.41, or 11.6% from its close just prior to the OPEC meeting.

This week's trading activity pushed technical indicators into overbought territory, but these moving oscillators have not yet indicated a shift in market direction. RSI's are trending sideways and appear getting ready to cross to the downside. Technical traders will be spurred into action upon a downward cross of these market indicators.

November RBOB slipped 1.6 cents, or 1.1%, to $1.482 a gallon, but posted a weekly gain of 1.3%. November heating oil  lost 1.7 cents, or 1%, settling at $1.579 a gallon, cutting the weekly gain to 2.7%. 

The CFTC reported Friday afternoon, that for the week ending October 4th, money managers had raised their net long positions in WTI futures and options to the highest level since the end of May. The reportable speculator group raised its combined net long futures and option positions on the NYMEX and ICE by 73,061 contracts to 253,393 during the period.

Fundamental News:  The number of rigs drilling for oil in the US rose this week, extending one of its best recoveries with no cuts for 15 straight weeks, with analysts expecting more additions after crude prices climbed back over $50 a barrel. Friday's report from Baker Hughes Inc. shows drillers added three oil rigs in the week to Oct. 7, bringing the total count up to 428, the most since February, but still below the 605 rigs seen a year ago.

Friday's statement from Russia's Energy Ministry said Russia's delegation will hold bilateral consultations with a number of oil ministers from global oil cartel OPEC in Istanbul next week, making another important step towards an oil output freeze.  But Russia said it doesn't expect to sign an oil output deal at that time. Russian Energy Minister Alexander Novak said in an interview in Moscow, "I don't think any agreements would be signed. It will just be consultations."

BofA Merrill in a research note to clients on Friday said that given its 2017 WTI price outlook of $59 per barrel, shale output should bottom in 1Q17, with U.S. crude output leveling off at 8.3 million b/d. It estimates that if a $40 price scenario is realized in 2017 for WTI, U.S. shale output would decline by 400,000 b/d, while in a $70 price scenario, an annual growth would reach 200,000 b/d.

Oil bull Andy Hall saidin his latest investor letter that OPEC is back in the business of determining oil prices as Saudi Arabia works with Russia and archrival Iran to achieve output cuts, and only "a brave person" would bet against this. Hall, who runs the $2.5 billion Astenbeck Capital Management fund, added that oil analysts were too quick to label OPEC dead when the cartel let the worst crude price crash in a generation happen two years ago by focusing on protecting individual market share.

Early Market Call - as of 10:12 AM EDT

WTI - Nov $50.51, up 70 cents

RBOB - Nov $1.4861, up 38 points

HO - Nov $1.5955, up 1.62 cents 

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Spot WTI traded above $50 a barrel for the first time since June

October 07, 2016

Recap: Since OPEC's meeting on September 28th, oil prices have risen over 7%, with both WTI and Brent futures hammering out four month highs. For the first time since June, spot WTI traded above $50 a barrel as traders continued to react to possible output freezes by some of the world's largest oil producers and to yesterday's unexpected drop in U.S. stockpiles. Adding to the supportive sentiment, are concerns about Hurricane Matthew and its impact on imports as it works its way up the east coast of the U.S.

Prices briefly turned lower after Genscape reported a build of almost 1 million barrels of oil stored in Cushing, Ok. November WTI fell to an intraday low of $49.90 a barrel, providing a buying opportunity for those traders who believe there is more upside potential. Oil resumed to the upside, with the spot contract peaking the session at $50.58.  Gains were slightly pared, with November WTI settling at $50.44 a barrel, up 61 cents, or 1.2%. December Brent ended the session at $52.51 a barrel, up 65 cents, or 1.3%.  

November RBOB closed at $1.498 a gallon, up half a cent, while November heating oi edged up by 1.4 cents, or 0.9%, to $1.596 a gallon.

Fundamental News: OPEC sources stated that a number of OPEC Oil Ministers and Russia's Energy Minister, all scheduled to attend an energy conference in Istanbul on October 8th-13th, are expected to meet informally during the conference.  However, they are unlikely to make any new decisions. 

Algeria's Energy Minister, Nouredine Bouterfa, said OPEC could cut its production at its late November meeting in Vienna by another 1% more than the amount agreed to in Algiers last month, if producers believe it is needed.  He also stated that OPEC and non-OPEC members would have an informal meeting in Istanbul.  He said OPEC is aiming for an oil price of $55/barrel.   

The head of the EIA, Adam Sieminski, said the response of US shale production over the next two months may well impact how OPEC decides to finalize the tentative production freeze it announced last week in Algiers.

Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, October 4th increased by 690,931 barrels from Friday, September 30th and by 994,230 barrels from Tuesday, September 27th

The head of global oil at PIRA Energy, Gary Ross, said demand is strong enough that the oil market is running a supply deficit, with prices seen at over $60/barrel next year.  He forecast that prices will reach the $60 to $65/barrel range next year. 

A tanker on Thursday loaded the first crude export cargo at Libya's Zuetina oil terminal since late last year.  A port official said the tanker was loading 800,000 barrels of oil for export to China.  A Libyan oil official said national production stood between 505,000 bpd and 510,000 bpd on Thursday. 

Libya's National Oil Corp denied media reports that it has completed preparations to restart one of its largest oil fields in the southwest of the country.  NOC criticized media reports that the 130,000 bpd El-Feel oilfield was close to reopening. 

Gasoline stocks held independently in the Amsterdam-Rotterdam-Antwerp oil terminal in the week ending October 6th fell by 17.72% on the week and by 27.76% on the year to 622,000 tons.  Gasoil stocks fell by 5.39% on the week and by 19.5% on the year to 3.022 million tons, while fuel oil stocks increased by 7.71% on the week but fell by 17.84% on the year to 838,000 tons. 

Early Market Call - as of 10:12 AM EDT

WTI - Nov $50.29 down 15 cents

RBOB - Nov $1.4896 down 82 points

HO - Nov $1.5839 down 1.13 cents

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Oil prices continued to rise after Tuesday's API report

October 06, 2016

Recap: November WTI opened above Tuesday's settlement of $48.69, as traders were still reacting to Tuesday's API report. Upward mobility continued, with WTI rising to just below $50 a barrel after the EIA reported a drop of 3 million barrels in U.S. crude oil inventories, far from the expected 2.6 million barrel increase. This was the fifth straight week of stockpile declines. Decreasing stockpiles, along with four consecutive weeks of falling refinery operations made this week's report notably more bullish.

November WTI finished the session at $49.83 a barrel, up $1.14, or 2.3%. December Brent rose 99 cents, or 2%, settling at $51.86 a barrel.

November RBOB fell 0.7 cent to $1.493 a gallon, while November heating oil  rose 2.8 cents, or 1.8%, to $1.582 a gallon.

Fundamental News:  Hurricane Matthew may delay petroleum cargoes to the US East Coast by four days as ships remain in port while the storm passes.  The US National Hurricane Center said the hurricane, which hit Haiti and Cuba on Tuesday, is forecast to head for the US and make landfall in the Carolinas on Saturday. 

PIRA Energy Group Chairman, Gary Ross, said OPEC's policy shift to embrace oil production cuts will help move crude prices towards a target range of $50/barrel to $60/barrel.  He also stated that US shale producers are likely to hedge more selectively and at higher prices following the OPEC agreement.    

Venezuela's Oil Minister, Eulogio Del Pino, said an agreement among OPEC and non-OPEC states to limit oil production could cut global supplies by 1.2 million bpd.  He said OPEC members would cut production by 700,000 bpd while non-OPEC states cut production by 500,000 bpd.  The deal, which will remain in effect for six months, would increase prices by $10 to $15/barrel above the average September price. 

Bloomberg reported that OPEC's crude oil production increased by 170,000 bpd to a record level of 33.75 million bpd in September.  Nigeria and Libya added a combined 190,000 bpd, which offset a decline in output from Saudi Arabia and Angola.  Production from Nigeria and Libya is returning after unrest affected the countries' oil infrastructure.  Together with Iran, they will likely be exempt from a preliminary deal agreed by OPEC to cut production.  Libya is expected to reach a production level of 600,000 bpd by the end of the month, according to the head of Libya's National Oil Corp, Ibrahim Al-Awami.   

Citigroup analysts said the Algiers agreement has raised the floor of the oil trading range to mid-$40s from the low-$40s. 

The US Census Bureau reported that US oil exports increased to 657,000 bpd in August from 474,000 bpd in July.  Its exports to Canada totaled 329,000 bpd. 

Statistics Canada reported that Canada's total crude oil exports increased by 720,000 bpd to 3.19 million bpd in August.  Its crude exports to the US increased by 630,000 bpd to 3.1 million bpd in August.  Canada's crude imports fell by 141,000 bpd to 731,000 bpd in August.  Its imports from the US fell by 149,000 bpd to 312,000 bpd in August.

U.S. oil refiners are expected to have 1,324,000 bpd of capacity offline in the week to Oct. 7, decreasing available refining capacity by 279,000 bpd from the previous week, according to Wednesday's data release from research company IIR. IIR expects offline capacity to rise to 1,403,000 bpd in the week to Oct. 14.

Early Market Call - as of 9:00 AM EDT

WTI - Nov $50.20, up 37 cents

RBOB - Nov $1.4854, down 74 points

HO - Nov $1.5839, up 14 points

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Oil prices rose after API reported a decrease in U.S. crude oil inventories

October 05, 2016

Recap: Oil prices rose in post settlement trading, reaching a new intraday high, after the API reported a decrease of 7.6 million barrels in U.S. crude oil inventories. Expectations were calling for a build of 2.6 million barrels. Despite WTI squeezing out a new four month high, the November futures contract was unable to sustain daily gains as the dollar reached its highest level in 13-days.Trading remained cautious ahead the release of U.S. inventory numbers, and continued to trade in a choppy fashion.

Gains were made early in the session, as traders continued to mull over OPEC's efforts to support this market. November WTI traded to a high of $49.13 before the release of the API report, for a modest gain of 32 cents, turning lower as the dollar strengthened. November WTI settled at $48.69, down 12 cents, or .25%. Brent for December delivery slipped just 2 cents, to settle at $50.87.   

November RBOB gained 2.91 cents, or 2%, to $1.4996 a gallon, while November heating oil tacked on 0.1 cent, to settle at $1.5544 a gallon.

Fundamental News: Hurricane Matthew is threatening to shut in about 33 million barrels of oil storage in the Bahamas and disrupt Caribbean shipping this week.  Statoil plans to evacuate workers later this week at its 6.7 million barrel South Riding Point terminal in Freeport, Bahamas.  Buckeye Partners LP also operates a 26.2 million barrel terminal on the island.

Gary Ross, founder and executive chairman at PIRA said OPEC producers have their sights set on a sustained oil price of $50-$60/barrel.  He challenged the assumption that a higher price could be self-defeating for OPEC because it will encourage shale producers to increase production.  He said OPEC producers have less variable costs and will benefit more from the increase in oil prices than shale producers. 

Iran's Oil Minister, Bijan Zanganeh, said that cooperation of non-OPEC producers would play an important role in stabilizing oil prices.  He also said Iran will sign more contracts by March 2017 to develop its oil fields. 

Sources stated that Iran's crude oil and condensate sales likely approached levels last seen at peak time in 2011 before western sanctions were imposed.  Iran likely sold 2.8 million bpd of crude and condensate in September. 

Russia's news agency, Interfax, reported Russian Energy Minister, Alexander Novak, as saying that experts from Russia and Saudi Arabia would determine a date for the energy ministers' meeting in the near future. 

Russia's Deputy Oil Minister, Kirill Molodtsov, said Russia has the capacity to raise its output further.  

Morgan Stanley stated that US shale producers were hedging future oil output at their highest levels this year.  It said the move to hedge came as the calendar 2017 strip increased to $52.29/barrel, its highest level since mid-August.

According to Bloomberg, US waterborne crude imports fell by 1.18 million bpd to 4.18 million bpd in the week ending September 29th. 

IHS reported that crude and refined product shipments from the US Gulf fell to 3.78 million metric tons on 92 ships in the week ending September 29th.  It is down 8% from the previous week's 4.11 million metric tons on 104 ships. 

Crude-by-rail shipments to the US West Coast from the Midwest fell for the fourth consecutive month in July.  The EIA reported that 3.29 million barrels of crude was moved by rail from the Midwest to the West Coast in July, down from 4.98 million barrels in March and down 43% from a peak of 5.76 million barrels in November. 

Early Market Call - as of 9:15 AM EDT

WTI - Nov $49.65 up 96 cents

RBOB - Oct $1.5085 up 89 points  

HO - Oct $1.5816 up 2.72 cents

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Oil prices continued to climb after Iran's President called for non-OPEC producers to help prop up prices

October 04, 2016

Recap:   Oil prices continued their ascent, bolstered by statements from Iran's President, calling upon non-OPEC producers to join OPEC members in their effort to prop up prices. Oil futures began the session trading below unchanged, but slowly rose during daytime trading, in what was a thinly traded market. November WTI reached its initial upside objective of $49.05, but proved unable to sustain strength above $49. This spot contract settled at $48.81 a barrel, up 57 cents, or 1.18%. Brent futures rose above $51 a barrel for the first time in 8 weeks, with the December contract peaking at $51.14, before paring gains to settle at $40.89 a barrel, up 70 cents, or 1.39%.  

November RBOB settled at $1.4705, up 74 points, or 0.5%, while heating oil for November delivery tacked on 1.49 cents, or 0.96%.

Fundamental News:  Saudi Arabia welcomed an agreement reached in Algiers last week on restraining oil output and said it hoped for further cooperation between oil producers inside and outside OPEC to help the interests of producers and consumers.  The council of ministers stressed the kingdom's keen desire for the stability of the international oil market in the interest of producers and consumers.

Fitch said the OPEC cuts might have the largest impact in North America.  It believes that the recently announced oil production targets at the recent meeting in Algiers is largely symbolic and unlikely to result in a strong rebound in global oil prices.

Iran's President Hassan Rouhani told his Venezuelan counterpart Nicolas Maduro in a phone conversation that it was essential for oil producing countries to make a decision to raise the price of oil and stabilize the market.  He added that OPEC members should also negotiate with non-OPEC members to stabilize the market. 

Iran's total crude oil and condensate sales likely reached about 2.8 million bpd in September, up from 2.5 million bpd in August.  Iran's crude exports increased slightly from the previous month to about 2.2 million bpd.  Iran sold 600,000 bpd of condensate for September, including about 100,000 bpd shipped from storage, to meet demand in Asia. 

The director of international affairs at the National Iranian Oil Company, Seyed Mohsen Ghamsari, said Iran wants to increase its crude exports to 2.35 million bpd in the coming months.  Iran is currently exporting 2.2 million bpd. 

According to Wood Mackenzie, oil stocks may decline by an average of 1 million bpd from the fourth quarter of 2016 through the fourth quarter of 2017 if OPEC implements its announced production cut.   

Bloomberg reported that total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle fell 0.6% in the week ending September 29th to 755,205 bpd from 759,884 bpd in the previous week.

China's oil demand recovered about 2% in August from 10 month lows in July as favorable weather after the rainy season helped industrial activity increase.  Market players and analysts expect the upward trend to continue at least until the middle of October.  Total apparent oil demand increased to 10.76 million bpd in August from 10.56 million bpd in July.  Meanwhile, the year on year decline narrowed to 4.3% in August from 7.1% in July.

Libya's Arabian Gulf Oil Company said its oil production increased to 320,000 bpd from 290,000 bpd last week. The increase came after production at Sarir field increased to about 200,000 bpd and production at Nafoura reached 29,000 bpd.

Early Market Call - as of 9:10 AM EDT

WTI - Nov $48.87 up 6 cents

RBOB - Nov $1.4130 up 2.25 cents

HO - Nov $1.5567 up 35 points

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Oil prices continued to rise despite another rise in U.S. oil rig counts

October 03, 2016

Recap:   Oil prices continued their ascent, despite the U.S. oil rig count rising for the 13th time in 14 weeks. According to the Baker Hughes report, U.S. rigs were up by 7, to a total of 425. Planned output cuts from within OPEC kept the rally going for the third straight day, although light profit taking kept a lid on prices. Spot WTI finished the month almost 8% higher, but was down 0.18% on the quarter, making this the first quarter down for the year. November futures settled at $48.24, up 0.85%, or 41 cents. Brent for November delivery finished at $49.05, up 19 cents, or 0.38%.

October RBOB, which expired today, ended at $1.487 a gallon, up 2.1 cents, or 1.4%. Futures prices saw a quarterly loss of roughly 0.9%. October heating oil gained 1.8 cents, or 1.2%, to $1.528 a gallon, with futures prices up about 2.9% for the quarter.

Fundamental News:  Baker Hughes reported that the number of rigs searching for oil increased by 7 to 425 in the week ending September 30th.

Oil Movements reported that OPEC cargoes, excluding those from Ecuador, Angola, Indonesia and Gabon, are expected to increase by 180,000 bpd to 23.85 million bpd in the four weeks ending October 15th.  Mideast shipments, including from Oman and Yemen, will also increase by 180,000 bpd to 17.2 million bpd over the period.

Venezuela's President, Nicolas Maduro, welcomed OPEC's agreement on oil production.  He expects Russia will join an OPEC agreement.

Nigeria's Ministry of Petroleum said the country is exempt from OPEC's oil supply deal.  It said a concession was granted because of recent challenges. 

Russia's Energy Minister, Alexander Novak, said Russia is discussing output stabilization with OPEC producers.  He also stated that Russia will find mechanisms and instruments needed to freeze oil production should the country reach an agreement with OPEC on limiting output. 

Norway's Petroleum and Energy Ministry reiterated that Norway is not planning to limit its production.   

China may have stored more oil than official estimates, according to analysis of satellite images by Orbital Insight.  Oil in storage was about 600 million barrels as of May. 

Lukoil's CEO, Vagit Alekperov, said Russia's oil output will stabilize in 2017, but may decline in 2018-2019.  He said the company will keep its crude output at this year's level in 2017.  He also stated that Lukoil is not ready to reduce its oil output but will join market stabilization measures if Russia reaches an agreement with OPEC.  

IIR reported that US oil refiners are expected to shut in 849,000 bpd of capacity in the week ending September 30th, increasing available refining capacity by 35,000 bpd from the previous week.  IIR expects offline capacity to increase to 1,141,000 bpd in the week ending October 7thand 1,308,000 bpd in the week ending October 14th.

BP's 415,000 bpd Whiting, Indiana refinery expects to keep its largest crude unit, Pipestill 12, shut until the middle of next week for emergency repairs. 

Phillips 66's 139,000 bpd Wilmington, California refinery is currently undergoing planned maintenance work.  It warned of planned flaring at the refinery. 

Citgo's Corpus Christi, Texas refinery restarted a crude distillation unit and vacuum distillation unit. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov $48.31, up 7 cents

RBOB - Nov $1.4530, down 1.04 cents

HO - Nov $1.5327, down 56 points 

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November WTI settled up in conjunction with a suggested OPEC output freeze

September 30, 2016

Recap:   Oil prices shook off some of Thursday's gains early in the session, but quickly reverted to the upside as U.S. traders awakened to a new day of trading.  The dip in November WTI brought this spot futures contract just above $46.51 and found support at the downward trend line drawn from August's high of $50.The bounce off of this trend line prompted a technical buy signal which, in conjunction with thoughts of OPEC output freezes, accelerated the move. WTI peaked at $48.31 prior to shedding gains to settle at $47.83 a barrel, up 78 cents, or 1.66%. November Brent tacked on 55 cents, or 1.13%, to settle at $49.24 a barrel.         

October RBOB fell 1.1 cents, or 0.7%, to $1.467 a gallon, while October heating oil settled at $1.510 a gallon, up 1.9 cents, or 1.3%.

Fundamental News:  According to Genscape, crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, September 27th fell by 537,369 barrels on the week and by 348,354 barrels from Friday, September 23rd to 64,815,871 barrels.  Cushing stock levels are down nearly 2 million barrels from a month ago. 

During the OPEC meeting on Wednesday, Iraq's new Oil Minister, Jaber Ali al-Luaibi, told his Saudi and Iranian counterparts, Khalid al-Falih and Bijan Zanganeh, that "it was an OPEC meeting for all ministers."  He said he did not like the idea of re-establishing OPEC's output ceiling at 32.5 million bpd.  He said the new ceiling was not good for Baghdad as OPEC underestimated Iraq's production.  Iraq overtook Iran as the group's second largest producer several years ago but kept its OPEC agenda fairly low-profile, until now.  Between now and November, OPEC will have to overcome obstacles to agree on a binding deal.  Iran insists it wants to raise output to about 4 million bpd while Saudi Arabia has proposed that Iran freeze its production at 3.7 million bpd.  Saudi Arabia is offering to cut production to 10.2 million bpd from 10.7 million bpd while Iraq, which has seen gains in its output in recent years, is asking oil majors to expand production further to over 5 million bpd from the current 4.7 million bpd.  An OPEC source said it remains to be seen how many real barrels are removed from the market.  

Russia's Energy Minister, Alexander Novak, said he believed OPEC's deal to limit production was a positive signal to the market but added that Russia aimed to keep its oil production at near-record levels.  He said Moscow was ready to consider proposals from OPEC for joint action on the oil market and would hold talks with the group in October and November. 

Goldman Sachs said the deal reached by OPEC producers to cut output should add $7 to $10 to oil prices in the first half of next year.  The bank kept its end of 2016 forecast for WTI at $43/barrel and its 2017 forecast at $53/barrel. 

A Nigerian militant group claimed an attack on Thursday on a crude pipeline operated by NNPC in the Niger Delta.  The Niger Delta Greenland Justice Mandate said it bombed the Unenurhie-Evwreni delivery line in Ughelli, Delta state. 

Canada's National Energy Board reported that crude-by-rail volumes in Canada averaged 53,089 bpd in July, up 23% from 43,205 bpd in June.  It said it was too early to offer any reasons for the increase in the crude shipments in July from June. 

According to cFlow, S&P Global Platts trade flow software, exports of distillates from the US gulf Coast to Europe in September totaled 1.07 million metric tons.  By comparison, a total of 1.73 million metric tons crossed the Atlantic in August. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov $48.12 up 28 cents

RBOB - Oct $1.4745 up 77 points

HO - Oct $1.5183 up 81 points

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Crude oil futures hit three week high after EIA report showed an unexpected decline in crude oil inventories

September 29, 2016

Recap: Crude oil futures rose to their highest level in three weeks after the EIA report showed an unexpected 1.88 million barrel decline in U.S. crude oil inventories and after OPEC agreed to limit production to 32.5 million barrels per day. In a surprise move, Saudi Arabia indicated that it would be willing to cut production, something this oil king has been reluctant to do in the past.

In overnight trading, November WTI remained within a 50 cent range, peaking just below $45 a barrel. As the session drew closer to the release of the EIA report, traders managed to tack on an additional 50 cents, taking this spot futures contract to a high of $45.50 and after the release, adding another 29 cents. Buying was cautious due to the OPEC/non-OPEC meeting in Algiers. As news reports began to circulate about a possible agreement to stabilize output, prices slowly climbed, with November WTI trading as much as 6.2% higher on the day, reaching a three-week high of $47.45. Gains were dashed as traders realized they would have to wait until November to see if freezes and/or cuts would materialize. November WTI settled at $47.05, up $2.38, or 5.33%. Brent for November delivery finished at $48.69 a barrel, up $2.72, or 5.92%. 

October RBOB rose 8.4 cents, or 6%, to $1.478 a gallon and October heating oil added 8.1 cents, or 5.8%, to $1.491 a gallon.

Fundamental News:  An OPEC source announced that OPEC reached a deal during informal talks on Wednesday to limit oil production to 32.5 million bpd from its current production of 33.24 million bpd starting in November.  It is the first time OPEC has cut its output since 2008.  OPEC will agree to concrete levels of production for each country at its next formal meeting in November.   The OPEC source said that after reaching its target, OPEC will go to non-OPEC producers for output support.  Nigeria's Oil Minster, Emmanuel Ibe Kachikwu, said OPEC will limit its output between a range of 32.5 and 33 million bpd.  Earlier, Saudi Arabia's Energy Minister, Khalid al-Falih, said that under a proposal, Iran, Nigeria and Libya would be allowed to produce at maximum levels as part of any output limits which could be set as early as the next OPEC meeting in November, with a 3.7 million bpd limit for Iran and 10.1 million bpd limit for Saudi Arabia.  That represents a strategy shift for Saudi Arabia, which previously said it would reduce output only if every other OPEC and non-OPEC producer followed suit.  Meanwhile, Iran argued it should be exempt from such limits as its production recovers after the lifting of EU sanctions earlier this year.  Iran's Oil Minister, Bijan Zanganeh, said OPEC finally reached an agreement after more than two years of trying to manage the market.  Separately, he stated that Iran would need more time to increase its output to about 4 million bpd.       

CME Group said the NYMEX will not apply the US EPA waiver to RBOB gasoline futures contract for October 2016 deliveries.  The EPA issued a waiver on September 16th in response to the pipeline leak that occurred on the Colonial Pipeline in Alabama.  The EPA waiver allows for delivery of conventional gasoline and related blendstocks in New Jersey. 

Libya's port of Zueitina will receive its first tanker since a force majeure was lifted on September 14th.   The tanker is due to arrive on October 3rd.   

Crude inventories in the ARA region increased by 671,000 barrels in the week ending September 23rd to 61.73 million bpd, according to Genscape.

According to China's General Administration of Customs, China imported 250 million tons of crude oil in the first eight months of 2016, up 13.5% on the year. 

Russia's crude and condensate production is set to average 11.1 million bpd this month compared with 10.7 million bpd in August.

Early Market Call - as of 9:00 AM EDT

WTI - Nov $47.00, down 5cents 

RBOB - Oct $1.4600, down 1.77 cents

HO - Oct $1.4882, down 28 points   

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Oil prices hit lowest level in 5 days after Iran refuses cut output

September 28, 2016

Recap: Iran's refusal to accept Saudi Arabia's offer to curtail its own output in exchange for a cut in output by Iran, sent oil prices tumbling to their lowest level in 5 days. November crude oil was trading basically unchanged before the aforementioned news broke, but fell steadily throughout the session as traders dumped any protective length put on yesterday. The sell-off pushed the spot WTI contract through its 50 and 200-day averages, to a low of $44.19. November WTI settled at $44.67 a barrel, down $1.26, or 2.7%. November Brent fell $1.38, or 2.9%, settling at $45.97 a barrel.

Losses were pared late in the session, with oil futures trading above unchanged after the API showed a 752,000 barrel draw in U.S. crude oil stocks. Expectations were calling for a build of 2.8 million barrels.

October RBOB settled at $1.394 a gallon, down less than a penny, while October heating oil lost 3.9 cents, or 2.7%, to $1.41 a gallon.

Fundamental News: Saudi Arabia's Energy Minister, Khalid al-Falih said the meeting between OPEC and non-OPEC producers in Algeria is a consultative meeting.  He does not expect an agreement on output cuts but added that a production freeze deal was still possible later in the year.  Meanwhile, Iran's Oil Minister, Bijan Zanganeh, said it is not the time for decision making, referring to the next formal OPEC meeting in Vienna on November 30th.  OPEC will hold informal talks on Wednesday.  Its members are also meeting with non-OPEC producers on the sidelines of the International Energy Forum.  Several OPEC delegates said the positions of Saudi Arabia and Iran remained too far apart.  Iran's Oil Minister said the country is not willing to freeze its oil output at current levels and does not intend to forge an agreement with other major crude producers at talks in Algeria.  Iran wants to raise its production to 4 million bpd.  Three OPEC sources said Iran insisted on having the right to increase its production to 4.1-4.2 million bpd, while OPEC Gulf members wanted its output to be frozen below 4 million bpd.  An Iranian source said Iran wants 12.7% of any new OPEC output ceiling.  He said Iran is keen on regaining its market share. Russia's Energy Minister, Alexander Novak, met Iran's Oil Minister on Tuesday in what sources said was a new attempt to persuade Iran to limit its production.

Russia's Energy Minister said that OPEC should agree internally and then Russia may join the talks.  He said Russia would prefer to freeze its oil output at current levels.  He also stated that if countries agree, another meeting between producers would be organized.  Several other sources said Algeria and Qatar were also talking to Iran in a bid to rescue a deal.

Later on Tuesday, Iraqi Oil Minister, Jabar Ali al-Luaibi, said Iraq was leading a mediation to bring the viewpoints of Saudi Arabia and Iran closer and bring about an agreement that would lift oil prices.  Iran had rejected a proposal from Saudi Arabia to limit its oil output in exchange for Saudi Arabia cutting its output. 

Venezuela's Oil Minister, Eulogio del Pino, said producers are still talking about removing 1 million bpd from oil markets. He said Venezuela may freeze production for more than 3 months.

According to Bloomberg, crude stocks held at the Cushing, Oklahoma storage hub fell by 200,000 barrels to 62.5 million barrels in the week ending September 23rd.  

IHS data showed that shipments of crude and refined product from the US Gulf totaled 4.11 million metric tons on 104 ships for the week ending September 22nd.  It is up 28% from the previous week's 3.2 million metric tons on 79 ships.   

The head of the IEA, Fatih Birol, said global oil output will exceed demand until late 2017. 

Early Market Call - as of 9:24 AM EDT

WTI - Nov $46.18 up 51 cents

RBOB - Oct $1.4314 up 3.77 cents  

HO - Oct $1.4300 up 2.01 cents

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