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Market Intel Archives

Increase in U.S. crude oil stocks pressured oil prices

January 26, 2017

Recap:   Early morning trading saw March WTI attempting to trade above its 30-day moving average for the third straight session. The 2.8 million barrel increase in U.S. crude oil stocks pressured prices, pushing them away from session highs. March WTI settled at $52.75 a barrel, down 43 cents, or 0.80%, while March Brent posted a modest gain of 36 cents, or 0.65%, to settle at $55.08 a barrel.

The consolidation in the oil markets continued under unstable market conditions. March's 30-day moving average continues to provide a strong level of resistance, as this spot contract has traded at or up to this level and failed to trade beyond it for 5 of the last 6 sessions. Lacking any new fundamentals, this pattern is most likely to continue, with this week's focus on Friday's release of the U.S. GDP, which is expected at 2.2%.  

February RBOB slipped 5.2 cents, or 3.3%, to $1.524 a gallon. February heating oil fell 3 cents, or 1.8%, to $1.611 a gallon. 

Fundamental News:  The EIA reported that US East Coast crude stocks increased by 3.4 million barrels to 17.7 million barrels, the largest weekly increase since 1998.  Meanwhile, ethanol futures fell to their lowest level since mid-November after the EIA reported that ethanol inventories increased to the highest level since May 2016.  Ethanol stocks increased by 613,000 barrels to 21.73 million barrels.  Output fell by 3,000 bpd to 1.05 million bpd. 

According to the Department of Energy, Shell and Phillips 66 bought 6.4 million barrels of oil last week from the SPR.  Shell bought 6.2 million barrels of oil and Phillips 66 bought 200,000 barrels on January 18th.  Shell will take delivery of 1.7 million barrels of oil to a vessel while the remainder of the barrels are slated for pipeline delivery. 

Kuwait's Oil Minister, Essam Al-Marzouq, said he expects global oil prices to remain in the range of $55-$60/barrel in 2017.  Kuwait's state budget for the 2017-2018 fiscal year is likely to assume an oil price of $45/barrel. He added that rebalancing of the oil market has already started.  It expects positive impact of the global supply cut deal between OPEC and non-OPEC producers to show by the end of the first quarter or the first half of 2017. 

Iran's Oil Minister, Bijan Zanganeh, said the country's oil production is currently close to 3.9 million bpd. 

Azerbaijan's Energy Minister, Natig Aliyev, said the country has reduced its oil production to 789,000 bpd in January as part of a deal between OPEC and non-OPEC oil producers. 

BP said in its annual Energy Outlook that global oil demand will continue to expand into the 2040s due to higher consumption of plastic goods even as the electric vehicle fleet expands rapidly and technology revolutionizes transport.  Oil demand growth over the period is set to slow from about 1 million bpd to 400,000 bpd by 2035, when consumption will reach about 110 million bpd.  Demand is not expected to peak before the 2040s.  BP forecast a significant slowing of carbon emissions, which remain well in excess of goals set by governments to fight global warming.  It also said current recoverable global oil supplies of about 2.6 trillion barrels are sufficient to meet demand out to 2050 twice over.   

IIR reported that US oil refiners are expected to shut in 1.123 million bpd of capacity in the week ending January 27th, reducing available refining capacity by 77,000 bpd from the previous week.  IIR expects offline capacity to fall to 995,000 bpd in the week ending February 3rd.


Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.72, up 97 cents

RBOB - Feb $1.5316, up 69 points

HO - Feb $1.6471, up 3.57 cents 


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Crude oil futures moved higher before release of American Petroleum Institute inventory report

January 25, 2017

Recap: Crude oil futures edged higher on Tuesday, ahead of the American Petroleum Institute's inventory report. March WTI gained 43 cents, or 0.82%, to settle at $53.18 a barrel, while Brent for March delivery tacked on 21 cents, or 0.38%, settling at $55.44.

Despite today's higher move, oil prices aren't showing any signs of breaking out of the consolidation pattern that has formed between $51 and $56 a barrel. In fact, technical indicators support continued sideways trading for the near term. It appears that traders are comfortable with their current positions in the market, as they await signs that either OPEC is not adhering as closely as they are reporting, or until U.S. production begins to ebb. The 30-day moving average, currently set at $53.63, continues to provide resistance, while the $51.20 level offers support.  

February RBOB was up almost a penny, or 0.6%, to finish at $1.576 a gallon, while February heating oil added 1.5 cents, or 0.9%, to $1.642 a gallon.

Fundamental News: Reuters was reporting Tuesday morning that according to industry sources and shipping data, Saudi Arabia's oil output is likely to drop to around 9.9 million b/d in January and exports are down from December. The kingdom pumped some 10.47 million b/d in December. Reuters is reporting that for the first three weeks of January Saudi Arabia exported some 7.36 million b/d versus 7.81 million b/d exported in December.

In a research note to clients, Bernstein Energy said it estimates global oil inventories declined by 24 million barrels to 5.7 billion barrels during the 4Q2016 from the third quarter. This amounts to 60 days of the world's oil consumption. They noted that this was the biggest quarterly decline since the fourth quarter of 2013, confirming that inventory builds are now reversing as the market shifts from oversupply to undersupply.

U.S. President Trump on Tuesday signed executive actions to accelerate the Keystone XL and Dakota Access pipeline projects and to decree that American steel should be used for pipelines built in the United States. He noted that "we are going to renegotiate some terms" of the Keystone XL project.

The chairman of Libya's National Oil Corporation sad that Libya is currently pumping 715,000 b/d of oil, the highest level since 2014, and is on track to keep boosting output this year to possibly reach 1.25 million b/d by the end of 2017.

Magellan Midstream Partners announced today it was expanding its current capacity from the Permian Basin by 100,000 b/d to a new capacity of about 400,000 b/d in the 2Q2017 following enhancements to existing pumps and related equipment.

Platts is reporting the 335,000 b/d Isla refinery in Curacao is scheduled to be shut for a total of 30 days from January 28th to February 25th for general maintenance on all process units and industrial plant services. 


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US crude oil production negated signs of OPEC output cuts

January 24, 2017

Recap:  Rising U.S. crude oil production negated signs of output cuts from within OPEC, and in turn pressured oil futures. March WTI fell as much as 1.9%, to a low of $52.21 prior to slicing losses, while Brent for March delivery slipped as much as 1.5%, bottoming at $54.65 during trading on Monday. March WTI finished at $52.75, down 47 cents, or 0.88%. March Brent settled at $55.23, down 26 cents, or 0.47%.

March WTI bounced around its 10-day moving average of $52.85, while continuing to hold below the 30-day moving average, currently set at $53.64. Resistance above these 2 levels rests at $54.30, and to the downside, support can be found around $52.20.

February RBOB finished close to unchanged, settling at $1.567 a gallon, while February heating oil slipped 1.9 cents, or 1.2%, to $1.627 a gallon.

Fundamental News:  Genscape reported that crude oil inventories held in Cushing, Oklahoma in the week ending January 20th fell by 213,761 barrels.

Ministers representing members of OPEC and non-OPEC producers said at a meeting in Vienna on Sunday that out of the 1.8 million bpd they agreed to cut, 1.5 million bpd had already been taken out of the market.  The committee, comprising ministers from Kuwait, Russia, Algeria, Venezuela and Oman, will meet again on March 17th in Kuwait and again in May.  Russia's Energy Minister, Alexander Novak, said the monitoring committee will assess data submitted by each producer country, along with information from agencies such as IHS Cambridge Energy Research Associates, Argus Media and the IEA.  The committee will evaluate compliance with production targets only, though the technical group may also look at export data to support its analysis.  He stated that expectations have been exceeded.  

Saudi Arabia's Energy Minister, Khalid Al-Falih, said the countries have already cut oil supply by 1.5 million bpd, more than 80% of their collective target.  He said compliance is great and he was positive that non-OPEC producers were taking part in the cuts.  He also said Saudi Arabia has exceeded its target by cutting output by more than 500,000 bpd to less than 10 million bpd.  Meanwhile, Kuwait's Oil Minister, Essam Al-Marzouk, said oil producers were in "total agreement" on the monitoring mechanism and would not accept anything less than 100% compliance with the cuts.  Kuwait was only required to cut output by 131,000 bpd, but having already reached that level, has cut its output by a further 6,000 bpd and plans to cut its output to 148,000 bpd. 

Venezuela's Oil Minister, Nelson Martinez, said the country's oil production was already down by half of its commitment. 

Iraq's Oil Minister, Jabar Ali al-Luaibi, said the country has reduced its oil production by about 180,000 bpd and plans to cut a further 30,000 bpd before the end of the month.  The cut came from a 4.75 million bpd level.  Iraq agreed to cut its output by 210,000 bpd under a deal struck in December between OPEC and non-OPEC producers.  He stated that most oil majors working on its territory were participating in the oil output reductions.  Iraq's Oil Minister said it was too early to say whether the deal needed to be extended and that he expected oil prices to increase to $60-$65/barrel.  


Early Market Call - as of 9:25 AM EDT

WTI - Mar $53.10 up 35 cents

RBOB - Feb $1.5860 up 1.93 cents

HO - Feb $1.6363 up 98 points 


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Oil prices settled up on expectation that OPEC producers adhered to output cuts

January 23, 2017

Recap:  Friday's trading provided a level of comfort for traders ahead of this weekend's OPEC meeting. It is expected that these producers were within adherence to the agreed upon output cuts, and therefore the global supply glut will diminish. March WTI peaked the session at $53.67, before trimming gains to settle at $53.22, up $1.10, or 2.1%. Brent for March delivery tacked on $1.33, or 2.46%, to settle at $55.49. 

Oil futures finished the week at almost unchanged, as both blends breached, but failed to settle above their 30-day moving averages. Prices will most likely continue to consolidate as traders await clear signs of direction. Coming into next week, prices will most likely continue to consolidate as traders await clear signs of direction.

February RBOB  gained 3.2 cents, or 2.1%, to $1.567 a gallon, finishing about 2.8% lower for the week, while February heating oil  rose 2.8 cents, or 1.7%, to $1.646 a gallon, declining about 0.3% on the week.

Fundamental News:  Saudi Arabia's Oil Minister, Khalid Al Falih, said that 1.5 million bpd had already been taken out of the market from an agreed cut of 1.8 million bpd.  He estimated the growth of shale oil in 2017 at 200,000 to 300,000 bpd.  He said an estimate of 500,000 barrels of shale oil by the head of the IEA were exaggerated. 

The Joint Organizations Data Initiative reported that Saudi Arabia's crude exports increased to a 13 ½ year high in November, just before it led global producers to cut output.  Saudi Arabia shipped 8.26 million bpd.  It was the largest outflow for any month since May 2003.  

Libya's National Oil Corp said production has now increased to 722,000 bpd, resuming its rise after poor weather had caused a small decline.  Production had fallen to 655,000 bpd due to poor weather delaying shipments, lack of storage capacity and technical problems. 

Euroilstock reported that Europe's total net refinery output fell by 2% in December from November to 11.251 million bpd.  Production was up 1.2% on the year.  Crude intake by refineries in December fell by 1.4% on the month to 10.705 million bpd.  Gasoline production fell by 2.9% on the month and by 0.3% on the year to 2.665 million bpd while distillate production fell by 2.2% on the month and by 0.6% on the year to 5.734 million bpd. 

Russia's Rosneft has started oil supplies to Hungary and Slovakia via the Druzhba pipeline, expanding its exposure to global markets after recent acquisitions. 

UBS reiterated its 2017 Brent and WTI forecasts at $60/barrel and $58/barrel, respectively while it cut its 2018-2020 forecasts.  The bank cut its oil price forecasts by $5/barrel in each of the year from 2018-2020 in order to reflect the continuing impact of a US shale recovery. 

Nigeria plans to export 276,000 bpd of Qua Iboe crude in March, according to preliminary loading plans.

IIR reported that US oil refiners are expected to shut in 1.066 million bpd of capacity in the week ending January 20th, cutting available refining capacity by 243,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.097 million bpd in the week ending January 27th. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $53.22, down 87 cents

RBOB - Feb $1.5660, down 2.02 cents

HO - Feb $1.6459, down 1.95 cents 


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Oil futures settled up after IEA raised its demand growth estimate

January 20, 2017

Recap: Oil futures bounced off of a one-week low after the International Energy Agency raised its demand growth estimate, citing rising demand, which in turn will eat away at the global oversupply. However, gains were limited by an unexpected 2.3 million barrel increase in U.S. crude oil stocks. February WTI, which expires on Friday, traded on moderate volume within an 85 cent range before settling at $52.37, up 29 cents, or 0.6%. March Brent gained 24 cents, or 0.45%, to settle at $54.16.  

February RBOB slipped 1.4 cents, or 0.9%, to $1.535 a gallon, while February heating oil  rose nearly a cent, or 0.6%, to $1.618 a gallon.

Fundamental News:  The IEA reported in its monthly oil market report that world oil markets are slowly tightening as demand increases while investors wait to see if production cuts agreed to by OPEC and other producers will be implemented as promised.  The IEA said output cuts announced by OPEC and non-OPEC producers have entered their probation period.  It said the oil market would continue to tighten, stabilizing prices and depleting stocks, if OPEC and fellow producers were able to produce close to their promised limits.  The agency said stronger oil demand has led it to increase its estimate of global oil demand growth over the last year by 110,000 bpd to 1.5 million bpd.  This year the agency expects world demand growth of about 1.3 million bpd.  It also stated that oil production in the US and other countries outside of OPEC were beginning to respond to higher prices since the announcement of the OPEC production cuts. 

Separately, the head of the IEA, Fatih Birol, said he expects US shale oil output to rebound by as much as 500,000 bpd over the course of 2017.  On average, the IEA said it expects US light tight production to grow by 170,000 bpd in 2017 after falling by nearly 300,000 bpd in 2016. 

Saudi Arabia's Energy Minister, Khalid Al Falih, said OPEC wants a lasting partnership with Moscow.   

The Joint Organizations Data Initiative reported that Saudi Arabia's crude oil exports in November increased to 8.258 million bpd from 7.636 million bpd in October.  It reported that the country's oil production increased by 95,000 bpd to 10.72 million bpd in November.  Its domestic crude refinery throughput fell by 380,000 bpd to 2.184 million bpd in November.  Its crude stocks fell by 2.22 million barrels to 274.366 million barrels in November. 

Azeri President, Ilham Aliyev, said Azerbaijan would support additional cuts to global oil crude oil production if such a decision is made by other oil producers within and outside of OPEC. 

Gasoline stocks independently held in the Amsterdam-Rotterdam-Antwerp hub in the week ending January 19th increased by 6.22% on the week and by 18.83% on the year to 1.161 million tons.  Gasoil stocks increased by 9.62% on the week but fell by 8.85% on the year to 3.224 million tons while fuel oil stocks fell by 2.49% on the week and by 44.1% on the year to 706,000 tons. 

Ethanol futures fell on Thursday after the EIA showed that production increased to surpass the prior week's record.  Ethanol production increased by 5,000 bpd to 1.05 million bpd, according to the EIA.  It was higher than expected and lifted inventories by 1.11 million barrels to 21.12 million barrels. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.55 up $1.18

RBOB - Feb $1.5736 up 3.89 cents

HO - Feb $1.6524 up 3.41 cents


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US shale production pushed oil futures to lowest level in a week

January 19, 2017

Recap: Overshadowing an earlier report indicating adherence to OPEC's agreed upon production cuts, rising U.S. shale production pushed oil futures to their lowest level in almost a week. In its monthly report, OPEC hinted that preliminary reports signal compliance by its members to the agreement. February WTI fell $1.40, or 2.67%, to settle at $51.08 a barrel, while march Brent slipped $1.55, or 2.79%, settling at $53.92 a barrel. 

February RBOB fell 5.2 cents, or 3.2%, to $1.549 a gallon, while February heating oil  lost 3.9 cents, or 2.4%, to $1.609 a gallon.

Technical indicators shifted momentum to the downside, as slow stochastics have crossed to the downside. Once again, February WTI failed to hold at its 10 and 30-day moving averages, proving them to be key areas of resistance. Coming into Wednesday, we would look for a run at $50. Resistance remains at the 10 and 30-day moving averages, which are respectively $52.44 and $52.87. Focus will be on the inventory report numbers due out Thursday.

Fundamental News: OPEC said its 13 members produced 33.085 million bpd in December, down 220,900 bpd from November.  Saudi Arabia's oil production is estimated to have fallen to 10.474 million bpd in December from 10.623 million bpd in November.  Under the agreement, Saudi Arabia had agreed to bring its output down to 10.06 million bpd between January and June.  OPEC cut its forecast of supply in 2017 from non-member countries following pledges by Russia and other non-members to join OPEC in cutting output.  OPEC expects non-OPEC supply to increase by 120,000 bpd this year, down from 300,000 bpd last month.  OPEC slightly increased its 2017 world oil demand growth forecast to 1.16 million bpd from a previous estimate of 1.15 million bpd.  It estimated that the call on its crude in 2017 would be 32.1 million bpd, just below the output target of 32.5 million bpd.  OPEC revised up its 2017 forecast of total US oil output by 230,000 bpd due to a rebound in drilling and shale production growth.

OPEC's Secretary General said "so far, so good on the OPEC cut agreement."

Saudi Arabia's Energy Minister, Khalid Al-Falih, said that the surprising strength of the oil market is the main reason why OPEC could end output cuts by the middle of the year.  He said OPEC and Russia may not need to extend the cuts when they expire in June. 

Saudi Aramco's Chief Executive, Amin Nasser, said the oil company was working on building its oil and gas production capacity to meet future demand growth.  However, he did not say that there were immediate plans to expand Aramco's oil production capacity beyond the current 12 million bpd. 

The IEA's Executive Director, Fatih Birol, said oil price gains will trigger a significant increase in US shale output as OPEC and other producers cut supply.  He said US shale oil production will react strongly.  He added that it will make sense to produce a lot of shale plays in the US at $56 to $57/barrel.  

Russia's Lukoil will account for 15% of the cut in production that Russia will make in January under the OPEC and non-OPEC agreement to limit output. 

The Houston Ship Channel was closed to inbound vessels on Wednesday due to fog.  There were 38 vessels waiting to dock. 

IIR reported that US oil refiners are expected to shut in 1.048 million bpd of capacity in the week ending January 20th, cutting refining capacity by 225,000 bpd from the previous week.  IIR expects offline capacity to fall to 973,000 bpd in the week ending January 27th. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $51.62, up 54 cents

RBOB - Feb $1.5485, down 2 points

HO - Feb $1.6246, up 1.57 cents 


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Forecasts of rising oil production put a cap on oil prices

January 18, 2017

Recap:  Weakness in the dollar sparked a run-up in oil prices, with February WTI trading just above $53.50 a barrel. However, gains were unsustainable, as forecasts for rising production out of the U.S. and Russian, along with reports of increases in Libya, Iran and Nigeria worked to put a cap on prices. February WTI settled up 11 cents, or 0.21%, at $52.48 a barrel. Brent for March delivery settled down 39 cents at $55.47. 

February RBOB fell 1.1 cent, or 0.7%, to settle at $1.6004 a gallon, while February heating oil slipped less than half a cent, or -0.18%, to $1.6486 a gallon.

Fundamental News: Genscape reported that crude oil stocks in Cushing, Oklahoma fell by 756,000 barrels in the week ending January 13th. 

Saudi Arabia's Energy Minister, Khalid Al Falih, said the first two weeks of January look positive and added that December was also positive because many countries reduced their production from the previous month.  He also stated that he was "feeling very good" after contacting Russia, which is ahead of its scheduled reduction.  Separately, he stated that he does not see US shale adding another 2-3 million bpd of new oil capacity any time soon. 

Separately, Saudi Aramco's Chief Executive, Amin Nasser, said Saudi Arabia is working on increasing oil production capacity from its current 12.5 million bpd.  He added that the world will need to invest $25 trillion in new capacity over the next 25 years to meet demand.  

Market sources said icy conditions in the oil fields in the Russian Far East and Russia's latest promise to cut production could lead to a decline in Sokol and Sakhalin Blend crude exports in the first quarter.  Exports of the Far East Russian grades for the first quarter may fall from the previous quarter as production and logistics are hampered by extreme cold winter conditions.  Sokol's final March loading program will be confirmed by next Friday. 

Iran's President Hassan Rouhani said US President-elect Trump cannot unilaterally cancel the nuclear deal Iran signed with world powers and that talk of renegotiating it was "meaningless."  President-elect Trump has threatened to either scrap the agreement or seek a better deal.

Mexico's Pemex began receiving imported fuel by train at a new privately run terminal for the first time in January as companies expand storage and transportation operations under the country's energy opening.  The cargo of 60,000 barrels arrived from Port Arthur, Texas on January 7th at the new private San Jose Iturbide storage terminal in central Guanajuato state via train. 

According to a Reuters poll, Russian oil production is likely to reach another post-Soviet record high in 2017 after a global deal to cut output expires at the end of June.  Russia's oil production is seen at 11.05 million bpd in 2017. 

IIR reported that US oil refiners are expected to shut in 1,007,000 bpd of capacity in the week ending January 20th, cutting available refining capacity by 184,000 bpd from the previous week.  IIR expects offline capacity to fall to 973,000 bpd in the week ending January 27th.

Shipping operations at one of three docks of Venezuela's main crude exporting port were halted after an oil spill occurred while loading a vessel bound for India.  The spill also affected other vessels close to the VLCC, Nave Quasar, chartered by India's Reliance Industries. 


Early Market Call - as of 9:30 AM EDT

WTI - Feb $51.37 down $1.12

RBOB - Feb $1.5606 down 3.98 cents

HO - Feb $1.61189 down 2.97 cents


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Saudi Arabia agreed to its commitment to cut output for six months

January 17, 2017

Recap: Due to the federal holiday, there were no settlements for Monday, January 16th. 

Fundamental News:  Saudi Arabia's Energy Minister, Khalid al-Falih, said the country will adhere strictly to its production commitment under the global agreement among oil producers to cut output.  He stated that OPEC and non-OPEC producers are unlikely to extend their agreement to cut oil production beyond six months, because of the level of compliance with the deal and the rebalancing of the market. However, he stated that producers would reassess the situation and extend the agreement, if necessary.

Iran's Oil Minister, Bijan Namdar Zanganeh, said he was confident OPEC and non-OPEC members would commit to the output cut deal agreed to in November.  He said this will remove the oil surplus from the market, balance the demand and supply, and support prices. 

Kuwait's Oil Minister, Essam al-Marzouq, said the country's oil output cuts could reach between 146,000 and 148,000 bpd, which is more than the reduction to which the OPEC member committed itself under last month's agreement. 

The UN's IAEA said Iran has complied with a deadline set by its nuclear deal with world powers by removing hundreds of centrifuges from a site buried deep inside a mountain.  It said the transfer of centrifuges and other equipment from Fordow to storage at another underground enrichment site at Natanz was completed with a deadline of one year from the day the deal was put in place, January 16, 2016. 

BP has announced that it is shipping a 250,000 ton cargo of diesel fuel to Rotterdam's Eco Seas port. The vessel is expected to arrive in Rotterdam on Jan 31.

Low water levels after dry weather over the past month are again preventing cargo vessels from sailing fully loaded on the Rhine and Danube Rivers in Germany. 

Algeria's Sonatrach has issued a tender to buy four cargoes or 120,000 tons of premium unleaded gasoline for delivery into the ports of Arzew and Algiers in February. 

BP's CFO, Alexander Krane said on Monday, that the company aims to cut production costs to $8-$10 per barrel of oil equivalent from a 2017 target of $11 per boe.

OMV said Libya's oil production has resumed and reached 3,000 bpd in the fourth quarter. 

Russia's oil and gas condensate production averaged 11.1 million bpd from January 1-15. 

The International Monetary Fund lifted its forecast for US Economic growth in 2017 and 2018 based on President-elect Donald Trump's tax cut and spending plans.  The IMF kept its overall global growth forecast unchanged from October at 3.4% for 2017 and 3.6% for 2018, up from 3.1% growth in 2016.  The US will see a slight 0.1% improvement in 2017 GDP and a stronger 0.4% gain in 2018 as Trump lays plans for expansionary fiscal measures including tax cuts and infrastructure spending.  The International Monetary fund upgraded China's economic growth estimate for 2017, while at the same time downgrading economic growth for India. China's estimated growth was revised by 0.3 percentage points to 6.5 percent.  The IMF noted expectations for continued policy stimulus.  India was downgraded by 0.4 percentage points to 7.2 percent, as the IMF noted India's decreasing consumption due to the government's decision to abolish large currency notes.


Early Market Call - as of 9:00 AM EDT

WTI - Feb $53.39, up $1.02

RBOB - Feb $1.6535, up 4.17 cents

HO - Feb $1.6923, up 4.10 cents 


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Oil market finds support overnight by strong Chinese crude imports

January 16, 2017

Recap: The oil market posted an inside trading day on Friday as the market failed to breach its previous trading range.  The market, which posted a high of $53.17, was supported overnight by strong Chinese crude imports, which increased by 14% in 2016 to 381.01 million metric tons or 7.65 million bpd.  However, the crude market's gains were limited by concerns over China's economic health.  China's overall exports in 2016 fell by 7.7%.  The export decline was the second annual decline in a row and the worst since the depths of the global crisis in 2009.  The market erased its gains and sold off to a low of $52.27 by mid-morning.  The market later retraced some of its losses and settled in sideways trading range during the remainder of the session. February WTI settled down 64 cents at $52.37, while March Brent settled down 56 cents at $55.45.  Meanwhile, the product markets were mixed, with the heating oil market settling down 2.42 cents at $1.6514 and the RBOB market settling up 9 points at $1.6117. 

Fundamental News:
  OPEC Secretary-General, Mohammed Barkindo, said he was confident oil producers would observe an agreement under which OPEC and non-OPEC producers have agreed to lower their oil output in order to support prices.  He stated that oil price volatility is here to stay. 

The Executive Director of the IEA, Fatih Birol, said shale output is set to increase if crude prices remain at $55-$60/barrel. 

Baker Hughes reported that the number of rigs drilling for oil in the US fell by 7 to 522 in the week ending January 13th. 

Oil Movements reported that Middle East shipments will fall by 480,000 bpd to 17.36 million bpd in the four weeks ending January 28th.  Total OPEC shipments will fall by 110,000 bpd to 24.14 million bpd compared with the period ending December 31st. 

Venezuela's PDVSA projects oil production will remain near 23-year lows in 2017.  PDVSA saw production fall by nearly 10% in 2016 due to an unraveling economy and low oil prices.  This year, PDVSA sees production at 2.501 million bpd, an increase of 5,000 from 2.496 million bpd for the first 11 months of the year. 

Iraq's OPEC Governor, Falah Al-Amri, said the country plans to cut its southern oil exports to 3.1-3.15 million bpd in January from 3.51 million bpd in December.  He said Iraq's oil exports stand at 3.077 million bpd.   

Tanker tracking for the first 11 days of January shows Iraqi crude exports down about 350,000 bpd from the average December level.  However, tankers are still loading in line with the program, which has the highest flow since October 2015. 

Kazakhstan may not be able to extend its commitment to helping OPEC cut global oil supply into the second half because its new field will increase its production.  The Kashagan field, which started exporting in October, is set to produce 370,000 bpd by the end of the year.  It is 190,000 bpd more than the government forecast last month.

British Colombia's decision to allow Kinder Morgan to triple the capacity of its Trans Mountain Pipeline will allow more crude from Canada's oil sands to reach Asia.  It will increase its capacity to 890,000 bpd from the current 300,000 bpd. 

The EPA announced a final determination that it would keep future targets calling for auto-makers to sell light vehicles averaging 54.5 miles per gallon or 40 mpg in real-world driving, by 2025.  The final decision faces intense resistance from auto companies, who are expected to lobby President-elect Donald Trump's administration for some relief from Friday's decision.


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.28, down 9 cents

RBOB - Feb $1.6121, up 4 points

HO - Feb $1.6522, up 8 points 


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Oil prices peaked after reports of 2 year output lows for Russian and Saudi Arabian oil

January 13, 2017

Recap: Oil prices peaked in overnight trading on reports of cuts in both Russian and Saudi Arabian oil output, which fell to its lowest level in almost 2 years. The ascent took February WTI to a morning high of $53.50, for a gain of $1.25, or 2.4%. March Brent reached a high of $56.43, up 2.4%, or $1.33 cents. The day's range was established before 10 o'clock in the morning, as both blends settled into a sideways trading pattern for the remainder of the day. February WTI settled at $53.01 a barrel, up 76 cents, or 1.45%, while Brent for March delivery posted a 91 cent, or 1.65% gain, to settle at $56.01 a barrel.

February RBOB gained 1.8 cents, or 1.1%, to $1.611 a gallon, while February heating oil tacked on 2.3 cents, or 1.4%, to $1.676 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending January 10th, fell by 529,986 barrels on the week.  Stocks fell by 133,554 barrels from Friday, January 6th. 

Saudi Arabia's Oil Minister, Khalid al-Falih, said the country has cut its crude oil production to below 10 million bpd.  He said his country would cut production even further in February.  OPEC decided to cut its output by 1.2 million bpd collectively after almost two years of pumping flat out in a fight for market share.  Saudi Arabia's share of that cut was 486,000 bpd, which would have brought its output to 10.058 million bpd.  He said that the OPEC and non-OPEC deal is for six months and will consider later whether to renew it.  He added that the OPEC deal will accelerate the rebalancing of the global oil market and that prices would respond later this year.  Saudi Arabia's Oil Minister also stated that demand for oil would continue to increase in 2017 and that markets will tighten in two to three years due to project delays. 

Iraq's Oil Minister, Jabar Ali al-Luaibi, said Iraq wants to see prices at around $65/barrel.  He said Iraq has cut its exports by 170,000 bpd and is expected to cut exports further by 40,000 bpd this week.  Separately, Iraq's Oil Minister said he hopes to consider a new round of oilfield tenders before the end of the year.  

Kuwait's Oil Minister, Essam Al-Marzouq, said the country has cut its output by more than the amount to which it committed in the OPEC agreement.  He said Kuwait has cut its oil exports by more than 133,000 bpd mainly to customers in North America and Europe while maintaining full exports to Asia.  Separately, he stated that the current oil price level is encouraging oil investments to come back.  

Russia's Energy Minister, Alexander Novak, said Russia has started cutting its oil production in line with the OPEC agreement.  Russian oil condensate production averaged 11.095 million bpd in the first 11 days of January compared with 11.21 million bpd in December. 

Kazakhstan's government said the country will increase its crude production this year while still meeting its obligations under the OPEC agreement. 

The director general of oil and gas marketing at Oman's Ministry of Oil, Ali Al-Riyami, said Oman has set its oil output limit at 970,094 bpd and set levels for individual companies. 

The UAE's Energy Minister, Suhail al-Mazrouei, said the progress made by OPEC and non-OPEC producers towards cutting oil output by 1.8 million bpd will be assessed next week at a meeting in Vienna.  He said oil prices this month made a fair movement towards a correction and were on the right trajectory to balance the market. 


Early Market Call - as of 9:35 AM EDT

WTI - Feb $52.63 down 38 cents

RBOB - Feb $1.6103 down 5 points

HO - Feb $1.6607 down 1.09 cents


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