Recap: Oil prices posted quarterly gains for the first this year, as they were racked by an array of news spanning between OPEC compliance to proposed cuts, the possibility of additional cut, hurricanes affecting U.S. production and demand, and geopolitical strife. After reaching a 10-month low in June, WTI has recaptured 73% of its fall from January highs, while Brent during the same time period, recaptured 94% of its fall from January highs. WTI finished the quarter at $51.67 a barrel, up 11 cents or 0.21% from Thursday’s close, while Brent tacked on 13 cents or 0.23%, to settle at $57.54 a barrel
October RBOB fell 2.5 cents, or 1.6%, to $1.607 a gallon, with the contract up about 14% for the quarter, while October heating oil fell 2 cents, or 1.1%, to $1.812 a gallon, ending up over 21% for the quarter.
Fundamental News: Baker Hughes reported that US energy companies added oil rigs for the first week in seven after a 14 month recovery stalled in August. Drillers added six oil rigs in the week ending September 29th.
Oil Movements reported that OPEC’s oil shipments are expected to increase by 130,000 barrels to 23.96 million bpd in the four week period ending October 14th, compared with the four week period ending September 16th.
Reuters reported that OPEC’s oil output in September increased by 50,000 bpd to 32.86 million bpd, as Iraqi exports increased and production increased in Libya. OPEC’s adherence to the pledged supply cuts fell to 86% from August’s 89%. Iraq’s production increased by 40,000 bpd due to higher exports from the Kurdish region. Saudi Arabia increased its production by 20,000 bpd. Meanwhile, Libya produced an extra 50,000 bpd in September as the Sharara field resumed operations after a pipeline blockade.
According to a Reuters survey, oil prices are unlikely to increase much beyond this month’s two-year highs this year. Brent crude is expected to average $52.60/barrel in 2017, up from last month’s forecast of $52.53/barrel. For 2018, Brent crude is expected to average $54.40/barrel compared with the previous month’s forecast of $54.48/barrel. The price of WTI crude is forecast to average $49.88/barrel in 2017 and $51.61/barrel in 2018, compared with a previous forecast of $50.01 and $51.92/barrel, respectively. Meanwhile, US shale production is set to increase for the 10th consecutive month in October to a record 6.1 million bpd.
The semi-official Tasnim news agency reported that Iran has banned the transportation of refined crude oil products by Iranian companies to and from Iraq’s Kurdistan region after Iran vowed to stand by Baghdad following the region’s vote for independence.
IIR reported that US oil refiners are estimated to shut in 1.68 million bpd of capacity in the week ending September 29th, increasing available refining capacity by 173,000 bpd from the previous week. IIR expects offline capacity to fall to 1.237 million bpd in the week ending October 6th and to 1.309 million bpd in the subsequent week.
According to Bloomberg, global refinery outages reached 4.37 million bpd in the week ending September 29th. It is down 5.2 million bpd from the previous week.
The EIA reported that US crude oil production in July increased by 141,000 bpd to 9.24 million bpd. Output increased by 21,000 bpd in Texas and by 14,000 bpd in North Dakota.
Diesel exports from the US Gulf Coast to Europe and the Mediterranean continued to increase as refineries resume normal operations, with more than 600,000 tons now expected to arrive in October.
Early Market Call - as of 9:00 AM EDT
WTI - Nov $52.22, down $1.45
RBOB - Nov $1.5478, down 4.3 cents
HO -Nov $1.7620, down 4.82 cents
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