Recap: It was another lackluster day in oil trading, with both blends finishing close to unchanged. Trading ranges were tight, with April WTI closing at $53.14 a barrel, down 6 cents, or 0.11%. Brent for May delivery slipped 9 cents, or 0.16%, to settle at $55.92 a barrel.
Oil futures remain range bound, hovering close to the 10 and 30-day moving averages, which are currently providing a ceiling for this market. Without any major shifts to shake things up, range trading will continue. Contango market conditions continue to widen, heightening the interest to store oil, lending pressure to this market. Support rests at $52.50, with resistance coming in at $53.70.
April RBOB rose 1 cent, or 0.6%, to $1.682 a gallon and April heating oil added 1.1 cents, or 0.7%, to $1.615 a gallon.
Fundamental News: In its latest Short-Term Energy Outlook, the EIA forecast Brent crude oil prices will average $55/barrel in 2017 and $57/barrel in 2018. WTI prices are expected to average about $1/barrel less than Brent prices in the forecast. The price of regular gasoline is forecast to average $2.40/gallon in 2017 and $2.44/gallon in 2018. The EIA also forecast that total world petroleum demand is expected to increase by 1.51 million bpd to 98.15 million bpd in 2017 and by 1.59 million bpd to 99.74 million bpd in 2018. It cut its 2017 growth forecast by 110,000 bpd but increased its 2018 growth estimate by 130,000 bpd. OPEC production is estimated to increase by 180,000 bpd to 32.7 million bpd in 2017 and by 500,000 bpd to 33.2 million bpd in 2018. Meanwhile, non-OPEC supply is expected to increase by 530,000 bpd to 58.71 million bpd in 2017 and by 990,000 bpd to 59.7 million bpd in 2018. Total US oil production is expected to increase by 330,000 bpd to 9.21 million bpd in 2017 and by 520,000 bpd to 9.73 million bpd in 2018. Total US petroleum demand is expected to increase by 210,000 bpd to 19.84 million bpd in 2017 and by 380,000 bpd to 20.22 million bpd in 2018. Gasoline demand is estimated to fall by 40,000 bpd to 9.29 million bpd in 2017 but increase by 100,000 bpd to 9.39 million bpd while distillate demand is expected to increase by 50,000 bpd to 3.93 million bpd in 2017 and by 90,000 bpd to 4.02 million bpd in 2018.
Bloomberg reported that crude oil stocks held in Cushing, Oklahoma increased by 750,000 barrels to 64.28 million barrels in the week ending March 3rd.
Saudi Arabia's Oil Minister, Khalid al-Falih, said oil market fundamentals were improving as an agreement to cut supply by OPEC and non-OPEC producers took effect. However, he said OPEC would not rival producers take advantage of the cuts to underwrite their own production investments. The group is expected to meet again in May, when it could consider extending the production cuts. He said Saudi Arabia does not want OPEC to intervene in the oil market to address long-term structural shifts, but would support measures to address short-term aberrations. Saudi Arabia's Oil Minister also stated that he is watching US producers closely. Meanwhile, an executive at Saudi Aramco, Mohammed al-Qahtani, said he expects oil prices to stabilize by the end of the year.
The Islamic Republic News Agency reported that Iran's crude oil export reached a record 3 million bpd in the Iranian month of Esfand, from late February to late March. Iran's Oil Minister, Bijan Namdar Zanganeh, credited Iran's nuclear agreement with western powers in 2015, which removed a number of sanctions in exchange for cuts on the country's nuclear program, for the increase in exports. He said Iran's oil exports have, on average, more than doubled since that time.
Iraq and Angola signaled a willingness to extend the group's production cuts into the second half of the year as the global rally in prices shows signs of stalling.
Early Market Call - as of 9:00 AM EDT
WTI - Apr $52.38, down 76 cents
RBOB - Apr $1.6858, up 60 points
HO - Apr $1.6104, down 33 points
View the Sprague Refined Products Market Watch Report in a downloadable pdf format.
Click to view more online:
View market updates
View our refined products glossary
Go to SpraguePORT online