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Market Intel Archives

For the first time in over 4 weeks Brent and WTI settled below their 10-day moving averages

November 15, 2017

Recap: Oil prices were hammered for the third straight session after the IEA downgraded its demand forecast for 2017 and 2018 to 1.5 million barrels per day and 1.3 million barrels per day, respectively. Both Brent and WTI settled below their 10-day moving averages for the first time in over 4 weeks. The break below these averages was ensued by an additional drop of 1.6% from the averages. By late morning, prices bottomed, reversed course, and trimmed early losses.

December RBOB fell 1.8% to $1.761 a gallon and December heating oil lost 1.3% to $1.907 a gallon.

Fundamental News:  Iraqi Kurdish authorities said they would accept a court decision prohibiting the region from seceding.  The Kurdistan Regional Government said it would respect the November 6th ruling by the Supreme Federal Court, which declared that no Iraqi province could secede. 

Iraqi/Kurd oil flows to Ceyhan have fallen to 180,000 bpd, according to a port agent. 

The IEA stated that global oil demand growth looks likely to increase more slowly over the coming months, as warmer temperatures cut demand, which may move the market back into surplus in the first half of next year.  It cut its oil demand forecast by 100,000 bpd for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.  It sees global oil demand growth at 97.7 million bpd in 2017 and 98.9 million bpd in 2018.  Global oil supply increased by 100,000 bpd in October to 97.5 million bpd on higher flows from non-OPEC countries.  The IEA stated that non-OPEC supply is expected to increase by 700,000 bpd in 2017 to 58.1 million bpd and by 1.4 million bpd next year to 59.5 million bpd, led by US output.  OPEC output fell by 80,000 bpd due mainly to lower supply from Algeria, Iraq and Nigeria.  OPEC produced 32.53 million bpd in October, with compliance rate with supply cuts at 96%.  It forecast the call on OPEC crude at 32.6 million bpd in the fourth quarter and 32 million bpd in the first quarter of 2018.  IEA stated that Hurricane Harvey contributed to OECD industry stocks falling by 40 million barrels in September. 

Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 50,000 barrels in the week ending November 10th to 64.5 million barrels. 

Bloomberg reported that preliminary US waterborne crude imports increased by 681,800 bpd to 5.05 million bpd in the week ending November 9th.  Imports into the West Coast increased by 366,200 bpd to 1.44 million bpd while imports into the East and Gulf Coasts increased by 38,500 bpd and 277,100 bpd, respectively. 

Gulf energy ministers expressed confidence about the extension of the OPEC agreement beyond March 2018 to rebalance the markets.  UAE Energy Minister, Suhail Al Mazroui, said there is potential for an extension of the OPEC agreement beyond March 2018 but the period of extension is subject to discussion.  He said there is still 158 million barrels of oil in storage which is over the five year average and needs to be reduced.  OPEC is scheduled to meet on November 30th to make a decision on the extension of the output cut agreement.  Oman’s Oil Minister, Mohammad Al Rumhy, also expressed confidence about the extension of the agreement until the end of 2018. 

Royal Dutch Shell said that production at four oil platforms in the Gulf of Mexico were shut in the wake of a November 8th fire at its Enchilada platform. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec $55.17, down 54 cents

RBOB - Dec $1.7380, down 2.32 cents

HO - Dec $1.8952, down 1.19 cents


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Brent and WTI experienced narrow trading ranges

November 14, 2017

Recap: Oil prices were mixed on Monday, with Brent coming under pressure and WTI holding close to unchanged, while both experienced narrow trading ranges. December WTI hovered close to the $57 level for most of the session, while January Brent traded just above $63 a barrel for the bulk of the session. Spot WTI settled at $56.76 a barrel, up 2 cents, or 0.04%, while January Brent fell 36 cents, or 0.57%, to settle at $63.16 a barrel.

December RBOB fell 1.95 cent, or 0.01%, to $1.7929 a gallon, while December heating oil declined 0.028 cents, or 0.14%, to end at $1.9321 a gallon.

Fundamental News: Distillate flows to Northwest Europe and the Mediterranean from the US Gulf Coast for November arrival total about 1.2 million metric tons, according to cFlow, S&P Global Platts trade flow software.  It was the first time the flow exceeded 1 million metric tons since Hurricane Harvey in late August. 

OPEC increased its forecasts of demand for its crude in 2018, signaling the rebalancing of the global market could gather pace.  OPEC raised its estimates for the amount it will need to pump to meet demand next year by 400,000 bpd to 33.4 million bpd.  OPEC said its output in October totaled 32.59 million bpd, a decline of about 150,000 bpd from September.  The OPEC production figure means compliance with the supply cut by the 11 members bound by the output targets has increased over 100% from 98% initially reported in September.  In a further sign that supply excess is easing, OPEC said inventories in developed economies fell by 23.6 million barrels in September to 2.985 billion barrels, 154 million barrels above the five year average.  OPEC expects oil demand to increase by 1.51 million bpd next year, up 130,000 bpd from a previous estimate, to 98.45 million bpd. 

OPEC’s Secretary General, Mohammad Barkindo, said the oil market is rebalancing at a quickening pace and production cuts are the only viable option to restore stability.  He said OPEC and non-OPEC producers are committed to continue their efforts until market stability is achieved.  He said he welcomes more oil producers to join the supply cut pact.   

Two OPEC ministers said OPEC and non-OPEC producers are moving towards deciding whether to extend the agreement to cut oil supply further into 2018 at the November 30th meeting.  The UAE’s Energy Minister, Suhail Al Mazrouei, said he saw no need for the decision to be delayed beyond the November 30th meeting.  He believes OPEC and non-OPEC producers will continue to make whatever decision it takes to stabilize the market at the upcoming meeting.  Meanwhile, Oman’s Oil Minister, Mohammed bin Hamad al-Rumhi, said he is confident there will be an agreement among global oil producers later this month to extend output cuts.  Oman’s current production is 968,000 bpd and the country is abiding by its quota. 

The EIA reported that US shale production for December is expected to increase for a 12th consecutive month.  Total shale output is estimated to have increased by more than 80,000 bpd to 6.17 million bpd. 

IIR reported that US oil refiners are expected to shut in 646,000 bpd of capacity in the week ending November 17th, increasing available refining capacity by 443,000 bpd from the previous week.  IIR expects offline capacity to fall to 524,000 bpd in the week ending November 24th. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec $56.52, down 24 cents

RBOB - Dec $1.7764, down 1.66 cents

HO -Dec $1.9234, down 91 points


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OPEC will continue to cut back on output through 2018

November 13, 2017

Recap: Oil prices slipped on Friday after Baker Hughes reported that the number of U.S. oil rigs rose this week, stemming the downward trend of recent weeks. According the report, the count for the week ending Nov. 3, rose by 9, with the number of oil rigs set at 738, versus 452 a year ago.

Both WTI and Brent traded within a narrow range under moderate volume, most likely due to the celebration of the U.S. Veteran’s Day holiday. At the beginning of the week, oil prices rose to their highest levels since 2015, bolstered by geo-political turmoil and expectations OPEC will continue to cut back on output through 2018. This week marks the fifth week in a row that oil prices have risen.  

December RBOB fell 0.73 cent, or 0.4%, to $1.8124 a gallon, while logging a 1.1% weekly rise, with futures gaining for five consecutive weeks. December heating oil declined 1.2 cents, or 0.6%, to end at $1.9349 a gallon, marking a 2.6% weekly gain and booking its fifth weekly climb in a row.

Fundamental News: Baker Hughes reported that oil companies added nine oil rigs in the week ending November 10th, bringing the total count up to 738.  US energy companies added the most oil drilling rigs in a week since June. 

Iraq’s oil exports from its northern Kurdish region to Turkey’s Ceyhan port were steady at 312,000 bpd on Friday.  Oil flow increased from 192,000 bpd on Wednesday.

UAE Energy Minister, Suhail bin Mohammed al-Mazroui, said oil producers will have little difficulty making a decision later this month on extending the OPEC and non-OPEC output cut deal.  He told the Saudi-owned Al Hayat newspaper that “the market needs a bit of a correction and no one is talking about not extending the cut”. 

Saudi Arabia plans to cut oil exports to all regions it ships to next month.  The country’s Energy Ministry stated that shipments will fall by 120,000 bpd in December from November.  Bloomberg calculations estimated October flows at 6.989 million bpd. 

Qatari Energy Minister, Mohammed al-Sada said oil is moving towards a fair price and the level of global stocks is declining and moving towards the level sought by OPEC. 

Oil Movements reported that OPEC shipments are expected to increase by 680,000 bpd to 24.13 million bpd in the four week period ending November 25th, compared with the four week period ending October 28th.  Middle East shipments, including those from non-OPEC countries, Oman and Yemen, are estimated to increase by 70,000 bpd to 17.23 million bpd. 

IIR reported that US oil refiners are expected to shut in 1.006 million bpd of capacity in the week ending November 10th, increasing available refining capacity by 425,000 bpd from the previous week.  IIR expects offline capacity to fall to 397,000 bpd in the week ending November 17th. 

According to Bloomberg, global refinery outages reached 2.58 million bpd in the week ending November 9th, down from 2.82 million bpd in the previous week. 

S&P Dow Jones Indices adjusted the weightings for its S&P GSCI commodity index for 2018, raising its energy sector weighting to 58.58% from 56.24% in 2017.  WTI crude oil will remain the largest weight in the 24-commodity index and have the largest percentage weight increase.  The new weightings will become effective on January 8, 2018. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $56.82, up 8 cents

RBOB - Dec $1.8091, down 35 points

HO -Dec $1.9315, down 31 points


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Saudi Arabia plans to trim crude oil exports by 120,000 barrels per day in December

November 10, 2017

Recap: Oil prices received a boost from Thursday’s Genscape report, which indicated U.S. crude oil stocks fell 1,087,542 barrels from Oct 31 to Nov 7th. Heightened concern over tensions in the Middle East and plans by Saudi Arabia to trim crude oil exports by 120,000 barrels per day in December compared to November, added to the higher move. December WTI settled at $57.17 a barrel, up 36 cents, or 0.6%, while Brent for January delivery finished at $63.93 a barrel, up 44 cents, or 0.69%.

December RBOB fell less than 0.1% to $1.82 a gallon and December heating oil advanced 2.5 cents, or 1.3%, to $1.947 a gallon.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, November 7th fell by 1,087,542 barrels on the week and by 718,718 barrels from Friday, November 3rd to 65,756,447 barrels. 

Iraq’s Kurdistan has made its full monthly payment of about $100 million to oil producers working on its territory, despite a large decline in oil exports amid a political crisis in the semi-autonomous region.  Kurdistan’s oil exports have declined to just about 220,000 bpd from the usual 600,000 bpd over the past month after some major fields have been taken over by Iraqi forces. 

Iraq’s oil exports from its northern Kurdish region to Turkey’s Ceyhan port increased to 312,000 bpd on Thursday, up from 192,000 bpd on Wednesday. 

Goldman Sachs stated that its year-end Brent price forecast of $58/barrel remains unchanged, given unchanged fundamental expectations.  It stated that while an increase in the US rig count and a noncommittal OPEC meeting would push prices lower, additional escalation of recent geopolitical tensions could lead to another large rally.  It stated that its third quarter 2017 global oil demand growth forecast has increased slightly to 1.68 million bpd and its fourth quarter global demand forecast increased to 1.73 million bpd and its 2018 global demand growth forecast is now 1.6 million bpd. 

Euroilstock reported that European crude and oil products inventories in October increased by 0.5% on the month to 1.124 billion barrels but fell by 0.4% on the year.  Refinery crude intake fell by 2.3% from September levels to 10.496 million bpd due to refinery maintenance.  European crude oil stocks in October totaled 483.48 million barrels, unchanged on the month but up 1.2% on the year.  European gasoline stocks in October increased by 2% on the month and by 0.5% on the year to 114.58 million barrels while middle distillates stocks fell by 0.1% on the month but fell by 1.6% on the year to 434.33 million barrels and fuel oil stocks increased by 1.5% on the month but fell by 5.7% on the year to 67.6 million barrels. 

Gasoline stocks held in independent storage tanks in the Amsterdam-Rotterdam-Antwerp terminal in the week ending November 9th increased by 18.48% on the week and by 24.09% on the year to 917,000 tons.  Gasoil stocks fell by 5.3% on the week and by 30.26% on the year to 2.056 million tons while its fuel oil stocks increased by 4.2% on the week and by 121.82% on the year to 1.413 million tons. 

According to Energy Aspects, nationwide gross oil refinery inputs are expected to increase over 17 million bpd before the year ends, even amid a busy maintenance season and interruptions at plants in the US Gulf of Mexico that were impacted by Hurricane Harvey in the third quarter. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $57.25, up 8 cents

RBOB - Dec $1.8261, up 66 points

HO -Dec $1.9501, up 34 points


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EIA reported a 2.2 million barrel build in U.S. crude oil inventories

November 09, 2017

Recap: Tuesday’s profit taking selloff in oil prices were furthered along on Wednesday by the 2.2 million barrel build in U.S. crude oil inventories as reported by the EIA. This overshadowed a previous report of a 1.562 million barrel draw by the API. In an immediate reaction to the EIA report, which reflected a 3.3 million barrel decrease in gasoline inventories and a 3.4 million barrel draw in distillates, oil prices rose to fresh 29 month highs. This rally was short lived, as traders had a more in depth look at the overall EIA report, which indicated U.S. crude production rose to 9.6 million barrels per day, the most in a week on record. December WTI fell 39 cents, or 0.68%, to settle at $56.81 a barrel, while January Brent slipped 20 cents, or 0.31%, settling at $63.49 a barrel.  

Traders will be keeping a close eye on tensions in the Mid-East and the OPEC led supply cut that was agreed upon a year ago. Tensions between Saudi Arabia and Iran have been heating up, while at the same time, Saudi Arabia’s Crown Prince, Mohammed bin Salman has ordered a crackdown on corruption in that country. Since being crowned, the prince has been determined to lead the conservative country away from its dependence on oil. OPEC has said that an extension of the output rollback should continue through the end of 2018.  

December RBOB rose less than a cent, or 0.3%, to $1.821 a gallon and December heating oil ended little changed at $1.922 a gallon.

Fundamental News: The EIA reported that US gasoline inventories fell to 209.5 million barrels in the week ending November 3rd, the lowest weekly level since November 2014.  US East Coast gasoline stocks fell to 52.4 million barrels in the week ending November 3rd, the lowest level since December 2014.  US Midwest gasoline inventories fell to 44.5 million barrels, the lowest level since November 2014.  The EIA also reported that US distillate inventories fell to 125.6 million barrels, the lowest level since February 2015, with US Midwest distillate inventories fell to 24.7 million barrels, the lowest level since November 2014. 

France’s Foreign Ministry said it was taking accusations by the US that Iran had violated two UN Security Council resolutions seriously and urged Iran to comply with all of its international commitments.  The US Ambassador to the UN, Nikki Haley, accused Iran of supplying Yemen’s Houthi rebels with a missile that was fired into Saudi Arabia in July and called for the UN to hold Iran accountable for violating two UN Security Council resolutions. 

Platts reported that OPEC produced 32.57 million bpd of oil in October, down 90,000 bpd on the month.  It stated that Iraq’s oil output fell to a six month low due to Kurdistan outages.  Nigeria, Algeria and Venezuela also posted steady declines.  OPEC’s compliance with the output cut agreement from January-October was 106%. 

IIR reported that US oil refiners are expected to shut in 1.004 million bpd of capacity in the week ending November 10th, increasing available capacity by 427,000 bpd from the previous week.  IIR expects offline capacity to fall to 480,000 bpd in the week ending November 17th. 

Energy Transfer Partners said that additional volumes for its Permian Express 3 crude pipeline will come online around year-end.  The company also stated that construction on the Bayou Bridge crude pipeline project will start this quarter, with operations expected to begin in the second half of 2018. 

Iraq’s oil exports from its northern Kirkuk region to Turkey fell to 192,000 bpd on Wednesday from 216,000 bpd on Tuesday. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $56.90, up 9 cents

RBOB - Dec $1.8141, down 71 points

HO -Dec $1.9289, up 72 points


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Oil prices started to declined since the news about the turmoil taking place in Saudi Arabia

November 08, 2017

Recap: Oil prices appeared to have over reacted to the turmoil taking place in Saudi Arabia, as they gave back some of the gains made off of this news. Oil prices, which rose to their highest level in over 2-years, slipped on Tuesday, as it became apparent that Crown Prince Mohammed bin Salman is serious about economic changes within Saudi Arabia, and the country’s reliance on oil as its major source of income. Looming in the background and limiting Tuesday’s retracement, are geopolitical tensions in the Mid-east. Skirmishes between Iraqi soldiers and Kurdish forces continue, while Saudi Arabia has accused Iran of supplying missiles to rebels in Yemen, one of which was intercepted Saturday. This, along with tightening supplies support higher prices, despite a technical outlook indicating that prices are a bit overdone to the upside.

December WTI fell 15 cents, or 0.26%, to settle at $57.20 a barrel, while January Brent lost 58 cents, or 0.90%, to settle at $63.69 a barrel.

December RBOB fell 0.8% to $1.815 a gallon and December heating oil lost 1.1% to $1.922 a gallon.

Fundamental News:  The EIA reported that total world oil consumption in 2017 is expected to increase by 1.31 million bpd to 98.21 million bpd while demand in 2018 is expected to increase by 1.66 million bpd to 99.87 million bpd.  It reported that OPEC’s oil production is expected to fall by 180,000 bpd to 32.5 million bpd in 2017 and increase by 490,000 bpd to 32.99 million bpd in 2018.  The EIA also reported that US oil demand in 2017 is expected to increase by 160,000 bpd to 19.85 million bpd and by 410,000 bpd to 20.26 million bpd in 2018.  Gasoline demand is expected to increase by 10,000 bpd to 9.33 million bpd in 2017 and by 20,000 bpd to 9.35 million bpd in 2018.  Meanwhile, distillate demand is estimated to increase by 40,000 bpd to 3.92 million bpd in 2017 and by 100,000 bpd to 4.02 million bpd in 2018.  US oil production is forecast to increase by 370,000 bpd to 9.23 million bpd in 2017 and by 720,000 bpd to 9.95 million bpd in 2018. 

Bloomberg reported that crude stocks held in Cushing, Oklahoma increased by 400,000 barrels to 64.2 million barrels in the week ending November 3rd. 

Saudi Arabia’s Crown Prince Mohammed bin Salman said Iran’s supply of rockets to militias in Yemen is an act of direct military aggression that could be an act of war.  His comments came after Saudi air defense forces intercepted a ballistic missile that Saudi Arabia said was fired towards Riyadh on Saturday by the Iran-allied Houthi militia, which controls large parts of neighboring Yemen.  He said the supply of rockets to the Houthi movement could constitute an act of war against the kingdom.  Iran has denied it was behind the missile launch.

OPEC stated in its 2017 World Oil Outlook that global demand for OPEC’s crude will increase in the next two years more slowly than expected, as a recovery in prices resulting from the OPEC-led supply cut stimulates renewed output growth from non-members.  Demand for OPEC crude will reach 33.1 million bpd in 2019.  It reported that global output of tight oil will reach 7 million bpd by 2020 and 9.22 million bpd in 2030.  OPEC also increased its medium term world oil demand forecast, expected to oil demand to reach 102.3 million bpd by 2022, up 2.24 million bpd from last year’s estimate. 

OPEC’s Secretary General, Mohammad Barkindo, said the market is finally coming back into balance driven largely by fundamentals.  He said OPEC is seeking to achieve a consensus agreement ahead of a meeting on November 30th on how long to extend the production cut agreement. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec $56.97, down 23 cents

RBOB - Dec $1.8059, down 94 points

HO - Dec $1.9143, down 76 points


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Oil prices rose to their highest level in 28 months

November 07, 2017

Recap:  Oil prices rose to their highest level in 28 months, as traders reacted to the weekend roundup of several Saudi Arabian officials and members of the royal family. In overnight trading, WTI held within a 74 cent range, however as the western part of the world awoke, this major political shake up sent shock waves through the oil market, pushing WTI above $57 a barrel and Brent above $64 a barrel. After reaching an intraday high of $57.61, December WTI slightly pared gains, to settle at $57.35 a barrel, up $1.71, or 3.07%. January Brent peaked the session at $64.44 before settling at $64.27, up $2.20, or 3.54%.

December RBOB gained 3.66 cents, or 2%, to $1.83 a gallon. December heating oil ended up 5.56 cents, or 3%, at $1.9422 a gallon.

Fundamental News: Oil production from the Kirkuk and Bai Hassan fields in northern Iraq restarted on Sunday.  Activity in the two fields, which normally produce up to 275,000 bpd together, remains low.  The restart comes two weeks after the Iraqi army took over the region from Kurdish forces, disruption that caused both fields to shut down.  Separately, Iraqi crude exports to the Kurdish region have been halted.

Iran’s Foreign Minister, Mohammad Javad Zarif, said Saudi Arabia was blaming Iran for the consequences of its own wars of aggression, after his Saudi counterpart accused Iran of threatening regional security.  Meanwhile, Saudi Foreign Minister, Adel al-Jubeir, said Saudi Arabia reserved the right to respond to Iran’s “hostile actions”, an apparent reference to a missile fired by Yemen’s Houthis who Saudi Arabia says are armed by Iran.

Saudi Arabian banks have started freezing the accounts of suspects involved in an anti-corruption probe.  Dozens of people including royals, ministers and businessmen have been detained in an investigation by a new anti-corruption body headed by Crown Prince Mohammed bin Salman. The central bank ordered banks to freeze the accounts of people under investigation.  Sources stated that the number of accounts affected could run into the hundreds.  The allegations against the men include money laundering, bribery, extorting officials and taking advantage of public office for personal growth.  Eleven princes, four sitting ministers and tens of former ministers were arrested on Saturday.  The dismissals and detentions suggest that Prince Mohammed rather than forging alliances is extending his iron grip to the ruling family, the military and the national guard to counter what appears to be more widespread opposition within the family as well as the military to his reforms and the Yemen war.  Analysts expressed concerns about the recent developments and their impact on Saudi Arabia’s image as an attractive investment destination. 

IIR reported that US oil refiners are expected to shut in 854,000 bpd of capacity in the week ending November 10th, increasing available refining capacity by 577,000 bpd from the previous week.  IIR expects offline capacity to fall to 420,000 bpd in the week ending November 17th. 

Nigeria’s Ministry of Petroleum Resources said OPEC’s crude oil production was 2.03 million bpd.

Separately, Nigeria’s Minister for the delta oil hub region, is ready to meet with militants for talks after the ceasefire was called off last week by the Niger Delta Avengers. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $57.26, down 10 cents

RBOB - Dec $1.8249, down 51 points

HO -Dec $1.9420, down 4 points


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Both WTI and January Brent had the highest weekly settlement in over 2 years

November 06, 2017

Recap: With the U.S. oil rig count falling four weeks out of five, and global demand on the rise, oil prices rose to a new high on the week.  According to Baker Hughes, the rig count fell by eight, to 729 active rigs in the week to Nov. 3. WTI reached a high of $55.72, prior to paring gains for a settlement of $55.64 a barrel, up $1.10, or 2.02%, while January Brent peaked the session at $62.21 before settling at $62.07 a barrel, up $1.45, or 2.39%. This is the highest weekly settlement for both blends in over 2 years.

WTI settled above the ascending channel depicted on the chart to the left. Although moving oscillators are set high in over bought territory, they are not showing signs of crossing to the downside. We would like to see a validation of this breakout, with a retest of the upper trend line, which is set at $55.37. This line provides the first level of support. Below that, support is provided by the 10-day moving average, which is currently set at $53.57. Resistance is set at $56.79.

December RBOB tacked on 1.3% to $1.793 a gallon, with the contract up 4.4% from a week ago. December heating oil ended at $1.887 a gallon, up 1.8% for the session and 1.1% higher for the week.

Fundamental News: Iraq’s Oil Minister, Jabbar al-Luaibi, said Baghdad’s talks with Turkey about increasing its oil exports from northern Iraq, including the semi-autonomous Kurdish region, is being complicated by a $4 billion debt that the Kurds owe to Turkey.  Iraq is seeking an agreement with Turkey for all exports from the north through a pipeline currently operated by the Kurds. 

Iraqi exports from its northern Kirkuk region to Turkey’s Ceyhan port increased to 360,000 bpd from 216,000 bpd on Thursday.

Saudi Arabia and Kazakhstan stressed on the need for OPEC and non-OPEC countries to comply with the agreed oil production cuts fully and continuously. 

Iraqi Basra crude in November has sold at the widest discounts to official prices in more than a year, with cargoes that backed up after hurricanes hit the US Gulf Coast facing competition from Mexican crude.  The fall in US demand for Iraqi crude may impede the country’s efforts to increase exports from the southern port of Basra to make up for a shortfall from the north.  More than 22 million barrels of Basra crude were bound for the US in each of October and November.  US imports of Mexican crude reached a four-month high of 21.3 million barrels in October, after earthquakes and storm damage shut Mexico’s largest refinery for most of the month.  US refiners also turned to less expensive domestic crude.  To cope with Basra crude surplus in the US, traders have slowed ships and stored some cargoes off the Gulf Coast. 

The US Census Bureau reported that US crude oil exports reached 1.473 million bpd in September, up from 772,000 bpd in August.  The three largest importers of US crude oil were Canada with 342,000 bpd, China with 251,000 bpd and South Korea with 150,000 bpd. 

According to an ESAI research note, US crude exports may not be sustained at 2 million bpd, as foreign sources compete for buyers.  The volume of US crude available for export is set to increase in the next two years, and will likely exceed 2 million bpd periodically.   

IIR reported that US oil refiners are estimated to have shut in 1.431 million bpd of capacity in the week ending November 3rd, increasing available refining capacity by 19,000 bpd from the previous week.  IIR expects offline capacity to fall to 780,000 bpd in the week ending November 10th and 334,000 bpd the following week. 

Bloomberg reported that global refinery outages totaled 2.67 million bpd in the week ending November 2nd, down from 4.37 million bpd in the previous week. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $55.74, up 10 cents

RBOB - Dec $1.7919, down 16 points

HO -Dec $1.8891, up 22 cents


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EIA report showed a larger than expected draw in U.S. stockpiles

November 03, 2017

Recap:  Oil prices lightly rebounded on Thursday; following Wednesday’s EIA report which showed a larger than expected draw in U.S. stockpiles. OPEC’s efforts to prop up prices appear to be gaining ground, as prices have reached their highest level in 2 years. Front month spreads have tightened as a result, with the spot WTI spread narrowing by 71% since the end of August. The Dec17/jan18 WTI spread finished the session at -23 cents.

December WTI tacked on 24 cents, or 0.44%, to settle at $54.54 a barrel, while January Brent settled at $60.62 a barrel, up 13 cents, or 0.221%.

December RBOB finished up 1.7% to settle at $1.770 a gallon while December heating oil lost 0.5% to $1.854 a gallon.

Fundamental News: Iraq’s Kurdish region said it had offered a joint Kurdish-Iraqi deployment at a strategic crossing into Turkey with the participation of US-led international forces as part of a compromise aimed at ending a stand-off with Baghdad. 

Iraq’s Oil Ministry reported that the country’s crude exports in October from its southern ports increased to an average of 3.348 million bpd, up about 100,000 bpd from September.  Iraq has increased shipments from its ports on the Gulf to make up for a shortfall from its northern Kirkuk fields.  The acting director general of Iraq’s SOMO, Alaa al-Yasiri, said Iraq wants the Kurdistan region to stop independent crude exports and to hand over sales operations to the oil company.  Iraq is talking to Turkey to allow SOMO to sell the Kurdish crude that arrives by pipeline in Ceyhan.  About 530,000 bpd used to arrive in Ceyhan via the pipeline until mid-October.  The pipeline carried on average 419,000 bpd in October, down from 600,000 bpd in September.  NOC should resume exports from Kirkuk through the Kurdish pipeline this month, after two sides agree on terms of use. 

Saudi Arabia’s Energy Minister, Khalid al-Falih, said the focus of oil producers will be to continue to work on drawing down crude inventories.  He said OPEC is not targeting oil prices but focusing on fundamentals.  OPEC is scheduled to meet in Vienna on November 30th.  Saudi Arabia sees OPEC and its allies renewing their resolve to normalize stockpiles in the coming weeks.   

Russia’s Energy Minister, Alexander Novak, held talks with Saudi King Salman on Thursday, after which he said that the global deal between OPEC and non-OPEC producers to cut oil production could be extended beyond March 2018 if needed.  However, he added that a decision would not necessarily be taken later this month.  Separately, he stated that sanctions on Russia recently imposed by the US should not have an impact on the country’s oil production or plans.   

Russia’s Energy Ministry reported that the country’s oil output increased to 10.93 million bpd in October from a yearly low of 10.91 million bpd in September and August following the completion of maintenance at Pacific fields. 

Iraq’s Oil Minister, Jabar al-Luaibi said Iraq supports keeping curbs on global oil supply to support prices. 

Bloomberg reported that OPEC’s compliance with production cuts agreed last year increased by 23% on the month to 104% in October.  It is the second highest level since OPEC began curbing output in January.  OPEC’s output fell by 180,000 bpd to 32.59 million bpd. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $54.65, up 11 cents

RBOB - Dec $1.7865, up 1.69 cents

HO -Dec $1.8601, up 60 points


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EIA reported a decrease of 2.4 million barrels in U.S. crude oil inventories

November 02, 2017

Recap: WTI rose to its highest level  in 10 months, while Brent peaked at a 28-month high in overnight trading as the rest of the world reacted to Tuesday’s API report, which showed a 5.1 million barrel decline in U.S. crude oil inventories. Gains were short lived, as the EIA reported a decrease of 2.4 million barrels, and although this was greater than the expected 1.8 million barrels, it fell short of the API report. Prices retreated, with December WTI falling 8 cents, or 0.15%, to settle at $54.30 a barrel and January Brent losing 45 cents, or 0.74%, to settle at $60.49 a barrel.

During the month of October, oil prices increased by almost 10%, providing bulls with a profitable month. Worth noting, is that the CME Group has reported open interest for WTI crude oil futures has risen above 2.5 million contracts for the first time on Oct 31. Focus for the month of November will be OPEC adherence to output cuts, and U.S. production, which has been on the rise.

December RBOB added 0.5% to $1.741 a gallon and December heating oil lost 1% to $1.863 a gallon.

Fundamental News: Oil exports from federally controlled northern Iraq are being redirected to refineries and storage facilities.  As of Sunday, the only oil flowing through the Kurdistan export pipeline to the Turkish port of Ceyhan was that produced by the Kurdistan Regional Government.  Kurdistan’s export flows by pipeline have averaged about 245,000 bpd, with another 38,000 bpd trucked into Turkey.  Iraqi oil exports from its northern Kurdish region to Turkey’s Ceyhan port fell to 216,000 bpd on Wednesday, down from 288,000 bpd on Tuesday.   

An Iraqi official stated that Kirkuk exports have been halted by Baghdad.

The IMF said that Saudi Arabia would require a crude price of at least $70/barrel in 2018, compared with an average $52.40/barrel for Dated Brent achieved so far this year, if it is to avoid a further drain on its fiscal accounts.  The data highlights the pressure Saudi Arabia is under when compared with its peers to extend OPEC’s current production cut agreement.  Saudi Arabia also requires higher prices to increase the valuation of Saudi Aramco ahead of an initial public offering or private placement expected by the end of 2018.  The country hopes the sale of a 5% stake in the company will raise $100 billion for the public finances, valuing the company at $2 trillion. 

Russia’s Deputy Foreign Minister, Sergei Ryabkov, said it is necessary to prevent new sanctions against Iran and preserve Iran’s nuclear deal with world powers. 

The EIA reported that the US imported 555,000 bpd from Venezuela in August, the smallest amount since January 2003.

According to PIRA Energy, OPEC and Russia will not scrap a deal that’s working, referring to the output cut agreement.  A PIRA official said that while a decision to extend oil production cuts may not be made at their November 30th meeting, it’ll come sooner or later.

IIR reported that US oil refiners are estimated to shut in 1,228 million bpd of capacity in the week ending November 3rd, increasing available refining capacity by 222,000 bpd from the previous week.  IIR expects offline capacity to fall to 483,000 bpd in the week ending November 10th. 

According to S&P Global Platts trade flow software cFlow, distillates flows to Northwest Europe and the Mediterranean from the US Gulf Coast for November arrival saw a sharp increase over the last seven days, with about 500,000 metric tons leaving the region. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $54.19, down 11 cents 

RBOB - Dec $1.7477, up 66 points

HO -Dec $1.8467, down 1.57 cents 


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