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Market Intel Archives

Oil prices held on to gains at start of U.S. summer driving season

May 30, 2017

Recap:  At the onset of Friday’s trading, oil prices extended their losses, with both blends falling as much as 1.4%. However, in what was perceived to be an overdone move to the downside, the selloff was reversed, as traders covered positions ahead of the long U.S. Memorial Day weekend, what is said to be the official start of the summer driving season. Despite the U.S. rig count rising for the 19th straight week, oil prices held on to gains. July WTI gained 90 cents, or 1.84%, to settle at $49.80 a barrel, while its European counterpart tacked on 69 cents, or 1.34%, to settle at $52.15 a barrel. 

June RBOB added 2.1% at $1.643 a gallon, ending 0.6% lower for the week, while June heating oil rose 0.8% to $1.563 a gallon, for a weekly loss of 1.2%.

Fundamental News Baker Hughes reported that US energy firms added oil rigs for a record 19 consecutive weeks.  Drillers searching for oil added two oil rigs in the week ending May 26th, bringing the total count up to 722, the most since April 2015. 

Saudi Arabia’s crude exports are expected to fall to 6.503 million bpd in May, falling below 7 million bpd for the first time in 2017.  Separately, according to two sources briefed on Saudi Arabia’s oil policy, Saudi crude shipments to the US will fall below 1 million bpd next month, a reduction of more than 15% from the average so far this year. 

The UAE’s Energy Minister, Suhail bin Mohammed al-Mazroui, said the extension of the global oil output cut deal will help to bring balance to the oil market and encourage investments in the oil sector. 

Russia’s Energy Minister, Alexander Novak, said that the monitoring committee may discuss possibility of adjusting options of a deal to cut production with OPEC at monitoring committee meeting.  At Thursday’s meeting, OPEC and some non-OPEC producers agreed to extend a pledge to cut about 1.8 million bpd of production until the end of the first quarter of 2018.  The initial agreement would have expired next month. 

Goldman Sachs stated that as the oil market responds skeptically to OPEC’s output cut agreement, the group has some challenges to tackle.  The organization will face the test of defending market share and generating revenue growth as it transitions from the cuts.  Additionally, backwardation will be needed for the cuts to achieve their goal of cutting an oversupply in stocks and prevent an unbridled increase in US shale production. 

Morgan Stanley lowered its end-2018 WTI crude price forecast to $55/barrel from a previous forecast of $60/barrel.  It also stated that OPEC’s extended cuts will likely lead to stock draws in the second quarter/third quarter and provide some oil price support.   

The EIA reported that US retail gasoline prices heading into the Memorial Day holiday weekend average $2.40/gallon nationally, up from $2.30/gallon last year. 

Colonial Pipeline Co is allocating Cycle 32 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Angola is expected to ship 52 crude cargoes in July with 1.62 million bpd, compared with 1.67 million bpd in June. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp terminal in the week ending May 26th fell by 13.48% on the week but fell by 27.71% on the year to 905,000 tons.  Gasoil stocks fell by 6.39% on the week and by 15.35% on the year to 2.784 million tons while fuel oil stocks increased by 11.92% on the week but fell by 9.71% on the year to 995,000 tons.  Naphtha stocks fell by 6.16% on the week but increased by 96.32% on the year to 320,000 tons while jet fuel stocks increased by 1.89% on the week and by 23.14% on the year to 809,000 tons.


Early Market Call - as of 11:55 AM EDT

WTI - July $49.24, down 56 cents

RBOB - June $1.6303, down 1.21 cents

HO - June $1.5461, down 1.67 cents


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Oil futures new highs were unsustainable after release of EIA report

May 25, 2017

Recap:  Already trading higher on the day, oil futures jumped to new highs on a larger than expected draw in U.S. crude oil inventories. However, the jump was short-lived, after traders took a more in depth look at the entire EIA report, which reflected less than expected draws in both gasoline and distillate numbers. Prices reverted to the down side, marking a new low for the day.  Losses were slightly trimmed, with July WTI dropping 11 cents, or 0.21% to settle at $51.36 a barrel, while July Brent slipped 19 cents, or 0.35%, to settle at $53.96 a barrel. Today’s lower settlement is the first in 6 days.

June RBOB fell less than a cent, or 0.5%, to $1.653 a gallon, while June heating oil finished little changed at $1.606 a gallon.

Fundamental News:  A five-country OPEC Monitoring Committee that includes Kuwait, Venezuela, Algeria, Russia and Oman recommended a nine-month extension to the OPEC and non-OPEC output cut agreement during a meeting on Wednesday.  Algeria’s Energy Minister, Noureddine Boutarfa, said nobody is opposed to a nine-month extension.

Saudi Arabia’s Oil Minister, Khalid al-Falih, reiterated that the country supports a nine-month extension of the OPEC and non-OPEC output cut agreement. 

Russia’s Energy Minister, Alexander Novak, supports a nine-month extension of the oil agreement.  However, he stated that several options were still being considered by the oil producers.  Russia has cut its output by an average of 310,000 bpd so far in May, over its 300,000 bpd output cut commitment. 

UAE Energy Minister, Suhail bin Mohammed al-Mazroui, said his country was ready to support either a six or a nine-month extension to an oil output cut agreement provided that it is supported by a majority.  He said the UAE expected full compliance with any deal reached at the OPEC meeting.

Kuwait’s Oil Minister, Ali Khalifa al-Sabah, said a 12-month extension of the output cut deal is not an option.  He said only a nine-month output extension will be considered at the meeting on Thursday.

According to analysis from BNP Paribas and Energy Aspects, the willingness by Iran’s Oil Minister, Bijan Namdar Zanganeh, to embrace a deal that leaves Iran room to pump about 3.8 million bpd signals the country is already pumping near capacity.  Iran’s Oil Minister said the country has no issue whether OPEC extended its output cut deal to six or nine-months.  He said OPEC will continue its production cuts but there is a debate among members about how long it will continue.  OPEC is expected to agree to extend current cuts by nine months at a Vienna meeting this week.  Iran pumped 3.76 million bpd in April, down slightly from January when it produced 3.8 million bpd.   

IIR reported that US oil refiners are expected to shut in 353,000 bpd of capacity in the week ending May 26th, increasing available refining capacity by 214,000 bpd from the previous week.  IIR expects offline capacity to fall to 341,000 bpd in the week ending June 2nd. 


Early Market Call - as of 9:00 AM EDT

WTI - July  $50.83, down 53 cents

RBOB - June $1.6487, down 46 points

HO - June $1.6042, down 13 points


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Oil prices gained for fifth straight session on hopes that OPEC will extend output cuts

May 24, 2017

Recap: Oil prices gained for the fifth straight session, supported by expectations that OPEC will extend recent output cuts, and may even deepen them.  Prices initially headed lower after U.S. President Trump proposed the possible sale of crude oil from U.S. strategic reserve stockpiles. July WTI fell just over 1%, reaching a low of $50.57, lower than Monday. A slow but steady rebound ensued as traders once again contemplated the upcoming OPEC meeting and the possibility of continued and/or additional decreases in output. July WTI clawed its way to a new daily high of $51.59, overshadowing that from Monday. This spot contract settled at $51.47 a barrel, up 34 cents or 0.7%. July Brent gained 28 cents, or 0.5%, to settle at $54.14 a barrel. Tuesday’s settlement marks the highest settlement in over a month for both blends.

June RBOB fell less than 1%, to $1.661 a gallon, while June heating oil added 0.3% to $1.607 a gallon.

Fundamental News:  Bloomberg reported that crude stocks in Cushing, Oklahoma fell by 100,000 barrels to 66.2 million barrels in the week ending May 19th.

The Trump administration’s plan to cut the national debt includes selling off half of the country’s 688 million barrel emergency oil stockpile.  President Trump’s first completed budget proposal would raise $500 million in fiscal year 2018 by draining the SPR and selling as much as $16.6 billion in oil over the next decade.  The budget proposal also includes the liquidation in fiscal 2018 of about 1 million barrels of gasoline reserves created in the aftermath of Hurricane Sandy in 2012.  The proposal also calls to open the Alaska National Wildlife Reserve to drilling.  It would raise $1.8 billion over the coming decade by leasing oil in the Arctic National Wildlife Reserve.   

OPEC delegates said OPEC will likely agree to extend production cuts for another nine months.  On Monday, Saudi Arabia’s Energy Minister, Khalid al-Falih, won support from Iraq for a nine-month extension and said he expected no objections from anyone else.  Meanwhile, Kuwait’s Oil Minister, Issam Almarzooq, said OPEC and non-OPEC oil producers have a preliminary agreement on at least a six month extension of crude production cuts with a revision in November for an additional three months.  However, he said that not all OPEC countries and its allies support a nine-month extension. 

Iraq’s Oil Minister, Jabbar Al-Luaibi, has promised to fully meet its share of the OPEC output cut in May. 

The UAE’s Energy Minister, Suhail bin Mohammed al-Mazroui, said the country supports extending oil output cuts for another term.

The semi-official Mehr news agency reported that Iran plans to increase its crude oil output by 8% or 300,000 bpd by March 2018.   

Mexico’s Deputy Secretary for Hydrocarbons, Aldo Flores-Quiroga, said the country supports an extension of OPEC’s supply cuts as a way to stabilize oil markets and bring new investment into the country’s growing energy sector. 

Norway’s Oil and Energy Ministry said the country has no plans to cut its oil output. 

According to IHS, crude and refined product shipments from the US Gulf increased to 4.02 million metric tons on 93 ships in the week ending May 18th. 

Customs data showed that preliminary US waterborne crude imports fell by 1.5 million bpd to 4.4 million bpd in the week ending May 18th. 

According to cFlow, Platts trade flow software, the amount of distillates expected to arrive in Europe from the Gulf Coast this month is about 1 million metric tons.  It is down from 1.25 million metric tons last month and nearly 2 million metric tons a year ago. 


Early Market Call - as of 9:00 AM EDT

WTI - July $51.29, down 18 cents

RBOB - June $1.6654, up 38 points

HO - June $1.6120, up 53 points


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Oil futures hit one month highs on hopes that OPEC will continue current output agreement

May 23, 2017

Recap:  Oil futures hit their highest level in one month on expectations OPEC will roll over the current output agreement and may possibly increase the size of their production cutbacks. July WTI rose to a high of $51.43, a gain of 76 cents, or 1.4% before paring gains, for a settlement of $51.13 a barrel, up 46 cents or 0.9%. Brent for July delivery rose 26 cents, or 0.5%, to settle at $53.87 a barrel. 

June RBOB rose a penny, or 0.6%, to $1.663 a gallon, while June heating oil added 1.9 cents, or 1.2%, to $1.602 a gallon.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, May 19th fell by 474,638 barrels on the week and by 46,241 barrels from Tuesday, May 16th to 68,281,787 barrels.

OPEC’s Secretary General, Mohammad Barkindo, said he saw a growing consensus among the group’s members as well as non-OPEC producers on the duration of an extension.  OPEC is scheduled to meet on Thursday to decide on its production policies after June. 

Saudi Arabia’s Oil Minister, Khalid al-Falih, said that an OPEC-led output cut had helped balance the market.  He said the industry had recovered but not completely.  He said he did not expect any opposition within OPEC to extending oil output cuts for a further nine months.  He said any decision would not be finalized until an OPEC meeting later this week.   

Iraq’s Oil Minister, Jabbar Al-Luaibi, said almost all countries agree on freezing oil output cuts.  He agreed with Saudi Arabia on the need for extending OPEC output cuts for a further nine months.  He said some ministers are thinking of a nine month extension to the output cut agreement, while others are thinking of a six month extension.  Separately, he stated that Iraq vows to keep investing in oil even if the price falls to $10/barrel.  He said Iraq will meet demand growth when the inventory overhang clears.     

Iraq pumped about 80,000 bpd more than permitted under the OPEC agreement during the first quarter.  According to analysts, if the deal gets extended to 2018, the country will have even less incentive to comply because capacity at key southern fields is expanding and three years of fighting Islamic state has left it drowning in debt. 

Qatar’s Oil Minister, Mohammad Al-Sada, joined an increasing number of major oil producers calling for an extension to the OPEC and non-OPEC output cut deal to the end of March 2018.  So far, Algeria, Iran, Iraq, Kuwait, Saudi Arabia, the UAE and Venezuela have all said they support some form of extension to the output cuts. 

Goldman Sachs reported that US production may increase by 290,000 bpd on average year on year in 2017 if the rig count remains at the current level.  In regards to OPEC, Goldman Sachs said OPEC should announce a decisive cut on May 25th, as normalizing stocks is a required first step.  It said a nine month extension of the OPEC cuts could normalize OECD stocks by early 2018 but it sees the risks of a renewed surplus later next year.  It said its second half of 2017 Brent spot price forecast remains at $57/barrel.  It said if backwardation is not achieved, however, it see risks that prices fall sharply next year as OPEC reverts to increasing market share through volumes. 

Libya’s National Oil Corp said the country’s oil production has recovered to 788,000 bpd and output should continue expanding in the next few days as the Messla and Sarir oil fields continue to recover after restarting in mid-May. 


Early Market Call - as of 9:00 AM EDT

WTI - July $51.22, up 9 cents

RBOB - June $1.6559, down 65 points

HO - June $1.6046, up 26 points


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Oil futures traded higher for second straight week as traders await OPEC meeting

May 22, 2017

Recap:  Oil futures posted sharp gains on Friday, trading higher for the second straight week, as traders await the outcome of the upcoming OPEC meeting. July WTI gained as much as 2.3%, rising above $50 a barrel for the first time since May 1, working its way toward the $51 mark to peak the session at $50.80. Gains were pared, with this soon to be spot month settling at $50.33, up 98 cents, or 1.99%. July Brent shot up 2%, reaching a high of $53.74 a barrel, slipped slightly to settle at $53.61 a barrel, up $1.10, or 2.09%. 

RBOB rose 2.7% to $1.650 a gallon, while June heating oil added 2.5% to $1.583 a gallon.

Fundamental News:  Baker Hughes reported that US oil drillers added 8 rigs in the week ending May 19th, bringing the total count to 720, the most since April 2015.

OPEC sources stated that an OPEC panel reviewing scenarios for the group’s meeting next week is looking at options of deepening and extending a deal to reduce crude output.  A source said a deeper cut in output was an option depending on estimated growth in supply from non-OPEC producers, mainly US shale oil companies, among other scenarios.

According to a Bloomberg survey, OPEC will extend its output cut agreement, even as increasing US output threatens the group’s goal of depleting excess supply.  Analysts polled stated that OPEC and non-OPEC producers will extend their cuts for at least six months when they meet on May 25th. 

After OPEC’s production cuts took effect in January, oil traders started depleting millions of barrels of crude from storage tanks.  However, many of those storage tanks are filling back up or draining at a slower than expected pace.  The stalled drawdowns shed light on the broader challenge facing OPEC as it struggles to steer the industry out of a downturn caused by oversupply, amid increasing US shale production, high inventories and prices remaining in the low-$50s/barrel range.  The market has not strengthened enough to drain many major storage facilities around the world.  Estimated inventories in industrialized countries totaled 3.025 billion barrels at the end of March, about 300 million barrels above the five-year average, according to the IEA.  Preliminary April data indicated stocks would increase further.   

The API said spring started with US drivers consuming a record amount of gasoline.  US gasoline consumption in April increased 0.6% on the year to 9.27 million bpd.  Total fuel deliveries increased by 1.7% to the highest April total since 2008. 

According to the EIA, US gasoline demand has been weaker than expected this year, but a growing economy and low pump prices have the energy industry expecting record demand again this summer driving season.  The EIA reported that gasoline demand in the first two months of 2017 was down 2.1% on the year.  Motorists are expected to hit US roads at rates not seen in a decade.  The AAA projected that 34.6 million people will drive 50 miles or more from home during the end-of-month holiday period, the most since 2005 when 37.3 million motorists hit the roads. 

Nigeria’s Petroleum and Natural Gas Senior Staff Association of Nigeria labor union called for the shutdown of all Exxon Mobil Corp facilities in the Niger Delta.  The call followed the breakdown of talks with the company over sackings and was part of a strike that began last week. 


Early Market Call - as of 9:00 AM EDT

WTI - June $50.72, up 37 cents

RBOB - June $1.6583, up 52 points

HO - June $1.5990, up 1.6 cents


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Oil prices slipped in overnight trading after concern over ample supplies of crude oil

May 19, 2017

Recap:  Oil prices slipped in overnight trading, with investors unloading risk amidst heightened concern over political turmoil in Washington and ample supplies of crude oil despite OPEC's efforts to reduce supplies. June WTI fell as much as 2.07%, or $1.02, to a low of $48.05 a barrel. Brent for July delivery dipped to a low of $51.11 a barrel, for a loss of $1.10, or 2.10%. A swift rebound ensued ahead of the May 25th OPEC meeting in Vienna with both crude oil benchmarks trading above the previous day’s highs. June WTI settled at $49.35 a barrel, up 28 cents, or 0.57%, while July Brent gained 30 cents, or 0.57%, to settle at $52.51 a barrel.

June RBOB rose 3.6 cents, or 0.2% at $1.6063 a gallon, while June heating posted a 1.2 cent gain, or 0.8% to settle at $1.5453 a gallon.

Fundamental News:  Algeria’s Energy Minister, Nouredine Bouterfa, said the majority of OPEC members support a proposed extension of a global oil output cut deal by nine months.  He said Algeria was in favor of extending the agreement on output cuts for nine months until the end of March 2018, adding global compliance with the deal, which expires at the end of June was at 95%.

Russia’s Energy Minister, Alexander Novak, said the country is maintaining its oil output cuts at 300,000 bpd, which it reached at the end of April. 

The Kremlin stated that Russian President, Vladmir Putin, and his Venezuelan counterpart, Nicolas Maduro, discussed by telephone the situation on global oil markets, including the agreement between OPEC and non-OPEC producer to cut production.

According to the Joint Organizations Data Initiative, Saudi Arabia’s oil exports in March increased to 7.232 million bpd, compared with 6.957 million bpd in February.  The country produced 9.9 million bpd in March, down from 10.011 million bpd in February. 

The IEA said Venezuela has cut its production more than any other OPEC members in the past year.  Venezuela produced 2.02 million bpd in April, down 310,000 bpd on the year. 

The head of Libya’s National Oil Corp, Mustafa Sanalla, said he was determined to fend off an attempt by the UN backed government to appropriate energy sector powers and said settling a dispute with Germany’s Wintershall over a contract was a top priority.  He said output from the NOC subsidiary, Waha Oil Co, could increase by 80,000 bpd in the coming weeks and that staff had returned to part of the Sirte basin for the first time in more than two years.  National output fell this week due to a power outage affecting the Messla and Sarir oil fields.  Libya’s Oil production partially recovered from 683,000 bpd to 724,000 bpd on Thursday. 

EIA data showed that there were 1.27 million bpd of distillate exports for the week ending May 12th, compared with 1.16 million bpd in the previous week.  

According to shipping data and trade sources, oil tankers carrying about 10 million barrels of US crude are en route to Asia, as US producers take advantage of favorable prices to ship to the region.  The increasing traffic to Asia is possible because of a widening premium for Brent over US crude.   

According to Bloomberg Intelligence, shale producers have become more efficient, with break-evens for Permian and Eagle Ford shale plays being as low as $34/barrel.  Analysts are increasing their growth forecasts for US shale, with Macquarie increasing its US shale growth forecast for December 2016 to December 2017 to 1.4 million bpd from a previous estimate of 900,000 bpd.  JP Morgan Chase raised its forecast by 400,000 bpd to 800,000 bpd for the same period. 


Early Market Call - as of 9:00 AM EDT

WTI - June $50.11, up 76 cents

RBOB - June $1.6270, up 2.04 cents

HO - June $1.5744, up 2.89 cents


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Oil futures hit highest level in 3 weeks after EIA reported decline in US inventories

May 18, 2017

Recap:  Oil futures settled at their highest level in almost 3 weeks after the EIA reported another week of inventory declines in the U.S; making it the sixth straight week of draws. Prior to the release of the numbers, oil prices were trading below unchanged by more than 50 cents. Within a minute after the release of the report, an 80 cent jump took place, with oil futures reaching the highs of the day. Gains were pared prior to settlement, with June WTI finishing up 41 cents, or 0.84%, to settle at $49.07 a barrel. Brent for July delivery gained 56 cents, or 1.08%, to settle at $52.21 a barrel.

June RBOB slipped 0.1% to settle at $1.603 a gallon, while June heating added 1.1% to settle at $1.534 a gallon.

Fundamental News:  According to Bloomberg, Iraq is on track for what may be the country’s highest monthly crude exports even as the country supports an extension of OPEC-led cuts aimed at cutting global inventories.  Vessels hauling 62 million barrels of the country’s crude departed ports in the Persian Gulf and Mediterranean Sea in the first half of May.  If sustained through May, the daily rate of 4.14 million barrels would exceed any month since Bloomberg began tracking shipments in January 2015. 

Russia’s Lukoil supports an extension of the OPEC/non-OPEC agreement to cut production. 

The head of Rosneft, Igor Sechin, said he asked Russia’s Energy Minister, Alexander Novak, to provide a smooth exit from the global deal to cut oil production once it expires.

South Sudan supports a nine-month extension of OPEC’s supply cuts. 

According to the former OPEC research head, the oil market will rebalance in the second half of 2018. 

Libya’s Messla and Sarir oil fields have restarted after production was halted on May 16th.  The combined output is expected to reach 280,000 bpd. 

Colonial Pipeline Co is allocating space for Cycle 30 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.

Genscape reported that crude oil inventories in the Amsterdam-Rotterdam-Antwerp region fell by 445,000 barrels in the week ending May 12th to 59.37 million barrels.

IIR reported that US oil refiners are expected to shut in 508,000 bpd of capacity in the week ending May 19th, increasing available refining capacity by 159,000 bpd from the previous week.  IIR expects offline capacity to fall to 288,000 bpd in the week ending May 26th. 

Jeffries said it was lowering its oil price forecast due to the strong increase in US production, cutting its previous Brent price estimate for the second half of 2017 to $59/barrel from $61/barrel. 


Early Market Call - as of 9:00 AM EDT

WTI - June  $48.52, down 55 cents

RBOB - June $1.5829, down 1.96 cents

HO - June $1.5266, down 69 points


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Oil futures moved higher after OPEC and non-OPEC members support extending supply cuts

May 17, 2017

Recap:  After opening the session trading unchanged, oil futures edged higher in overnight trading after OPEC and non-OPEC members echoed support for extending supply cuts through March of 2018. Attempts to gain momentum to the upside failed under subdued trading, as traders await reports regarding U.S. inventory numbers. June WTI fell 19 cents, or 0.39%, to settle at $48.66 a barrel, while July Brent settled at $51.65 a barrel, down 17 cents, or 0.33%.

June RBOB gained 0.6% to $1.604 a gallon, while June heating oil rose 0.5% to $1.516 a gallon.

Fundamental News:  Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 400,000 barrels to 65.87 million barrels in the week ending May 12th. 

The IEA stated that the global oil market is rebalancing and the pace at which supply and demand are falling into line is picking up, even if inventories still fail to reflect the impact of OPEC’s output cuts.  In its monthly report, the IEA kept its global demand growth forecast for 2017 unchanged at 1.3 million bpd.  Commercial inventories fell for a second consecutive month in March, by 32.9 million barrels to 3.025 billion barrels.  The IEA reported that global oil supply fell by 140,000 bpd in April to 96.17 million bpd, led by declines in countries outside OPEC, such as Canada.  Non-OPEC production is expected to increase by 600,000 bpd this year.  The IEA also stated that if OPEC maintained its output at April’s 31.8 million bpd, and nothing changed elsewhere in the balance, there would be an implied global draw of 700,000 bpd in the second quarter. 

Sources familiar with Iranian thinking said a proposal to extend an OPEC and non-OPEC supply cut for nine months is a positive idea, suggesting that the country is likely to agree to an extension, if there is a consensus.  On Monday, Saudi Arabia and Russia agreed on the need to extend the cuts for nine months until March 2018 to deplete the oversupply.  Russia’s Energy Minister, Alexander Novak, said the main aim of the proposed extension of the output cuts was to bring the world’s commercial oil inventories down to the five-year average and stabilize the market.  He also stated that the OPEC deal may be extended to three-to-five more countries.  Meanwhile, on Tuesday, Kuwait’s Oil Minister, Essam al-Marzouq, said it supported the proposal.  Iraq’s Prime Minister, Haider al-Abadi, said the country is committed to reducing oil production to cut a surplus in the global market.  Venezuela’s Oil Ministry said the country supported a nine-month extension of an agreement between OPEC and non-OPEC countries to limit crude production, hoping to achieve a stabilization of the oil market. 

Nigerian workers from the Petroleum and Natural Gas Senior Staff Association of Nigeria have extended a strike to oil majors, Chevron, Shell and Eni subsidiary Agip in protest over the dismissal of members from Exxon Mobil.  PENGASSAN General Secretary, Lumumba Okugbara, said the union’s 10,000 members were taking part in the three-day nationwide strike which started on Monday and would continue until Wednesday. 

According to Bloomberg, preliminary US waterborne crude imports increased by 1.3 million bpd to 5.6 million bpd in the week ending May 11th. 

Crude and refined product shipments from the US Gulf fell to 3.45 million metric tons on 90 ships in the week ending May 11th.  It is down 21% from the previous week’s 4.43 million metric tons on 105 ships. 

Genscape reported that crude-by-rail loadings in North Dakota fell by 111,000 bpd to 130,000 bpd in the week ending May 5th. 


Early Market Call - as of 9:00 AM EDT

WTI - June $48.92, up 26 cents

RBOB - June $1.6104, up 63 points 

HO - June $1.5282, up 1.19 cents


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Oil futures hit two-week highs on expressed support to extend OPEC output cut agreement

May 16, 2017

Recap:  After opening the session trading near unchanged, oil futures bounced after Saudi Arabia and Russia expressed support for extending the OPEC led agreement to cut back on output. Energy ministers from both countries stated their support for extending the cuts out to March of 2018. On this news, both Brent and WTI rose to two-week highs, with Brent touching above $50 a barrel for the first time since the two-week high. July Brent finished at $51.82 a barrel, up 98 cents, or 1.93%, while June WTI gained $1.01, or 2.11%, to settle at $48.85 a barrel.

June RBOB rose 1.2% to $1.595 a gallon, while June heating oil ended at $1.510 a gallon, up 1.1%.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, May 12th fell by 504,860 barrels on the week and by 284,097 barrels from Tuesday, May 9th to 68,756,425 barrels.

Saudi Arabia and Russia favor extending the OPEC/non-OPEC oil output cuts through the end of the first quarter of 2018, setting a firmer timeframe for a likely extension of the cuts into next year.  During a joint press conference, Saudi Arabia’s Energy Minister, Khalid Al-Falih, and Russia’s Energy Minister, Alexander Novak, said extending the cuts is needed to reach the goal of reducing global inventories to the 5-year average.  They said they would do whatever it takes to reduce the inventory overhang.  They will present their position ahead of a meeting between OPEC and other nations that are part of the agreement later this month in Vienna.  Separately, Russia’s President, Vladimir Putin, said that extending oil output cuts for another nine months was the right thing to do to ensure stable oil prices. 

An OPEC source said global oil inventories in floating storage have declined by one-third since the start of the year. 

Kazakhstan’s Energy Minister, Kanat Bozumbayev, said the country will not automatically join the OPEC oil cuts extension.  It will discuss the level of participation at the OPEC meeting on May 24-25. 

Goldman Sachs stated that Saudi Arabia and Russia’s commitment to extend oil production cuts significantly increases the likelihood that all participants will agree to such an extension, with the longer duration likely helping to achieve high compliance through 2017.  It kept its third quarter $57/barrel Brent price forecast and raised its confidence that the oil market will shift into backwardation in the third quarter, amid the increasingly likely extension of the output cuts.  It said oil prices will likely remain in a $45-$55/barrel long-term range.  Separately, Goldman Sachs analysts stated that US crude production may increase by 775,000 bpd between the fourth quarter of 2016 and fourth quarter of 2017 across the Permian, Eagle Ford, Bakken and Niobrara shale plays, assuming the rig count remains at the current level.

The EIA reported that US shale oil production is expected to increase for the sixth consecutive month.  Output is set to increase by 122,000 bpd to 5.4 million bpd in June.  In the Permian, oil production is expected to increase by 71,000 bpd to 2.49 million bpd while in Eagle Ford, output is set to increase by 36,000 bpd to 1.28 million bpd and production in Bakken is forecast to increase by 5,800 bpd to 1.03 million bpd. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.11, up 26 cents

RBOB - June $1.6090, up 1.4 cents

HO - June $1.5265, up 1.68 cents


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Oil futures posted weekly gains for the first time in 4 weeks

May 15, 2017

Recap:  For the first time in 4 weeks, oil futures posted weekly gains, but only managed to finish slightly higher on the day. Prices rebounded from last week’s slide that was attributed to fund liquidation. Focus remains on the upcoming May 25th OPEC meeting, where it is highly anticipated that its members will extend the recent production cuts. June WTI posted an extremely modest gain of 1 cent, settling at $47.84 a barrel, while July Brent finished up 7 cents, at $50.84 a barrel. Both gained more than 3% on the week.

June RBOB rose 0.8% to $1.574 a gallon—up about 4.7% on the week, while June heating oil added less than 0.1% to $1.491 a gallon, trading 3.8% higher for the week.

Fundamental News:  Oil Movements reported that OPEC oil shipments are expected to increase by 2.7% to 24.5 million bpd in the four week period ending May 27th compared with the four week period ending April 29th.

According to Bloomberg, Kuwait, Qatar, Saudi Arabia, the UAE and Venezuela were the only OPEC members that complied with agreed output cuts as of April. 

Iraq’s Oil Minister, Jaber Ali Al-Luabi said that all OPEC members favor extending the output cuts for another six months. 

Sources stated that Venezuela has told other OPEC members that it wants deeper cuts, of up to 5 million bpd, which has not seen support.

Egypt’s Petroleum Minister, Tarek El-Molla said the country will participate in the May 25th OPEC meeting in Vienna as an invitee, but does not plan to join the group’s output cuts because it is short on products and does not export crude. 

The PENGASSAN union branch of ExxonMobil said senior employees of ExxonMobil’s Nigerian production unit, who had been on strike for more than a week, are expected to begin a gradual shutdown of production facilities if ExxonMobil fails to meet their demands.  The union called its members out on strike on May 3rd to demand the reinstatement of over 80 of its members fired by the company.  A spokesman for ExxonMobil said talks between the company and union scheduled for Wednesday and brokered by Labor Minister, Chris Ngige, were boycotted by the union. 

The IEA will review its electric vehicle use and oil demand forecasts after India and China recently signaled new policies in favor of electric cars and vehicles using other alternatives to gasoline.  In its current policies scenario, the IEA expects vehicle demand for oil to increase until 2040.  China said it wants alternative fuel vehicles to account for at least one-fifth of a projected 35 million annual vehicle sales by 2025 while an influential government think-tank in India is drafting a report in support of electrifying all vehicles in the country by 2032.  The IEA said China and India currently consume 11% and 2% of global gasoline demand, respectively. 

Iraq’s SOMO plans to export 3.215 million bpd of Basra crude in June, slightly lower than last month due to a cut in heavy grade supplies.  The June exports include 2.448 million bpd of Basra Light and 767,000 bpd of Basra Heavy crude. 

Russian Urals crude was recently imported into the US East Coast for the first time since 2013.  Two Urals cargoes aboard the same vessel were unloaded along the US East Coast within the past two weeks.  The cargoes were shipped by Statoil from storage in the Bahamas. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.55 up $1.71

RBOB - June $1.6164 up 4.03 cents

HO - June $1.5380 up 4.47 cents


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