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Market Intel Archives

EIA report indicated 5.2 million barrel drop in U.S. crude oil inventories

May 12, 2017

Recap:  Oil prices posted their second straight day of gains ignited by the EIA report showing a 5.2 million barrel drop in U.S. crude oil inventories. Prices opened just above unchanged and continued to trade on the plus side for the remainder of the session, gaining as much as 1.8%, and reaching their highest level in just over a week.  

Statements by OPEC and raising its forecast for 2017 oil supply from non-OPEC members kept a cap on prices. Brent for July delivery gained 55 cents, or 1.10%, to settle at $50.77 a barrel, while June WTI tacked on 50 cents, or 1.06%, to settle at $47.83 a barrel.

June gasoline RBOB rose 1.5% to $1.562 a gallon and June heating oil added 1% to $1.490 a gallon.

Fundamental News:  Genscape reported that oil stocks held in Cushing, Oklahoma in the week ending Tuesday, May 9th fell by 129,603 barrels on the week and by 220,764 barrels from Friday, May 5th to 69,040,522 barrels.

The head of the IEA’s oil industry and market division, Neil Atkinson, said global oil prices will likely increase from current levels on an increasing supply deficit in the second half of the year if OPEC and non-OPEC producers extend their output cut deal later this month.  He said the oil market is already “very close to balance.”  He stated that the IEA continues to expect global oil demand growth to average 1.3 million bpd this year with demand growth to continue but at a slower pace over the coming five years. 

In a monthly report, OPEC raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage US shale producers to increase their production.  It revised its estimate of oil supply growth from non-OPEC producers this year to 950,000 bpd, up from a previous estimate of 580,000 bpd.  The increase in non-OPEC supplies will reduce demand for OPEC oil this year to 31.9 million bpd, down from a previous estimate of 32.2 million bpd.  OPEC also noted the continued high compliance by its members with the supply cut agreement and said oil stocks in industrialized countries fell in March, although they are still 276 million above the five year average.  OPEC’s oil production in April fell by 18,000 bpd to 31.73 million bpd. 

Iraq’s Oil Minister, Jabbar Al-Luaibi, and Algeria’s Oil Minister, Noureddine Boutarfa, said OPEC and other oil producers participating in output cuts have reached a consensus to extend the limits until the end of the year.  All members of OPEC support an extension of the cuts for a second six-month period, as do non-member nations that jointed the agreement.  

The chair of the Lagos zone of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Abel Agarin, said its members at Exxon Mobil were on strike in protest of the sacking of 150 workers in December.  PENGASSAN said the strikes were being held in Lagos, Bonny, Akwa Ibom and Port Harcourt. 

Vitol’s executive committee member, Chris Bake, said the oil market has not seen the decline in stocks that it expected for the first half of 2017.  He said that while oil inventories were shifting, with cargoes moving from the Atlantic Basin into Asia, the overall drawdown that many hoped for amid OPEC-led production cuts had not yet materialized. 

According to Bloomberg oil strategist, Julian Lee, OPEC must cut its oil production by an extra 850,000 bpd to drain the 276 million barrel OECD stock surplus by the end of the year. 


Early Market Call - as of 9:00 AM EDT

WTI - June $47.81, down 2 cents 

RBOB - June $1.5760, up 1.4 cents

HO - June $1.4999, up 1.02 cents


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Oil futures rose 4.1 percent after EIA report indicated decrease in U.S. crude oil inventories

May 11, 2017

Recap:  Oil futures rose as much as 4.1 percent on Wednesday after the EIA reported a 5.2 million barrel decrease in U.S. crude oil inventories and on signs that OPEC members may be joining hands in extending the output cuts voted on in November. It is doubtful, however, that prices will be able to sustain gains, given the fact that inventories typically experience a seasonal decline, and current stock levels are 25 percent higher than the 5 year average. Adding pressure is rising output from the U.S., Libya and Nigeria. It will take great commitment within OPEC and outside OPEC for prices to hold onto gains. June WTI reached a high of $47.78, before paring gains, to settle at $47.33, up $1.45 or 3.16%, while Brent for July delivery rose $1.49, or 3.06%, to settle at $50.22.

Saudi Arabia’s efforts to flood the market in 2015 had a significant impact on the price of oil. Despite the current OPEC/non-OPEC production agreement being in place for nearly 5 months, U.S. total oil inventories are nearly identical to stock levels a year ago at this time.  In addition, average oil prices for the month of May are within 16 cents of the average price recorded in May 2016. It seems fair to say that OPEC has a lot more work to do in order to prop up prices; therefore, it would not be surprising to see an extension of the aforementioned cuts.

Fundamental News OPEC’s estimate of its oil production in April fell to 31.732 million bpd.  Secondary sources stated that Saudi Arabia produced 9.954 million bpd in April.

Saudi Arabia has notified at least two Asian refiners of its first cuts in crude allocations for regional buyers since an OPEC output cut took effect in January.  Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June.  It has notified at least one South Korean buyer that it would cut contracted oil supplies in June. 

Algeria’s Energy Ministry said Algeria and Iraq are in favor of extending the OPEC/ non-OPEC production cut deal for a further six months.

The spokesman for Russian President Vladimir Putin declined to respond to a question on whether Russia had agreed to cut its oil production as part of a global deal beyond 2017 but said that the relevant talks have been underway. 

Libya’s National Oil Corp stated that the country’s oil production is running at over 800,000 bpd for the first time since 2014.  The NOC said national output could reach between 1.1 million and 1.2 million bpd if political obstacles were removed.   However, NOC said that a commercial dispute with Germany’s Wintershall has shut in a further 160,000 bpd.  Wintershall said its concession deals with Libya were valid despite a commercial dispute that Libya’s NOC has cut production.    

Barclays said US shale explorers are increasing drilling budgets 10 times faster than the rest of the world.  North American drillers plan to lift their 2017 outlays by 32% to $84 billion, compared with 3% for international projects.  Most of the increase in spending is flowing into the Permian Basin, where producers have been reaping double-digit returns. 

Goldman Sach’s head of commodities research, Jeff Currie, said now is a good time to go with a long oil position as a supply deficit nears.  He said near-term oil fundamentals are seen improving.  He said if the US government were to introduce a border tax adjustment on crude oil imports, the spread between Brent and US futures would widen dramatically.  He said WTI crude could trade $15/barrel above Brent.  The premium of Brent crude futures over WTI is currently about 2.81/barrel.     

IIR reported that US oil refiners are expected to shut in 611,000 bpd of capacity in the week ending May 12th, increasing available refining capacity by 170,000 bpd from the previous week.  IIR expects offline capacity to fall to 433,000 bpd in the week ending May 19th. 


Early Market Call - as of 9:00 AM EDT

WTI - June  $47.95, up 62 cents

RBOB - June $1.5580, up 1.75 cents

HO - June $1.4865, up 1.10 cents


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Rising U.S. production continued to negate OPEC's efforts to prop up oil prices

May 10, 2017

Recap:  Oil prices were unable to hold onto gains made Monday, succumbing to pressure from slumping demand, and rising U.S. production, which has tarnished OPEC’s efforts to prop up prices. Not even a fifth week of expected declines in U.S. crude oil inventories could support this market, as inventories are close to record levels. June WTI fell 55 cents, or 1.18%, to settle at $45.88 a barrel. Brent for July delivery settled at $48.73 a barrel, down 61 cents, or 1.24%.

June RBOB fell 1.7% to $1.490 a gallon, while June heating oil lost 0.9% to $1.442 a gallon.

Fundamental News:  According to Bloomberg, crude inventories at the Cushing, Oklahoma storage hub increased by 60,000 barrels to 66.77 million barrels in the week ending May 5th.

The EIA stated in its Short Term Energy Outlook that it expects US crude oil production in 2017 to increase by more than previously expected.  It forecast 2017 oil production will increase to 9.31 million bpd this year from 8.87 million bpd in 2016, up 440,000 bpd.  Last month, it forecasted a 350,000 bpd year on year increase.  For 2018, it cut its growth forecast to 650,000 bpd compared with a previous forecast of a 680,000 bpd increase.  Meanwhile, the EIA forecast that US oil demand for 2017 is set to increase by 290,000 bpd, compared with a 250,000 bpd growth previously.  For 2018, oil demand is expected to increase by 300,000 bpd, compared with a previous estimate of 340,000 bpd.  Gasoline demand is expected to remain unchanged at 9.33 million bpd in 2017 and increase by 30,000 bpd to 9.36 million bpd in 2018.  Distillate demand is expected to increase by 80,000 bpd to 3.96 million bpd in 2017 and by 90,000 bpd to 4.05 million bpd in 2018.  World oil demand is estimated to increase by 1.56 million bpd to 98.3 million bpd in 2017 and increase by 1.63 million bpd to 99.93 million bpd in 2018. 

Libya is producing more oil than it has in two years as the country restores its output.  The increase adds to the pressure on the world’s largest producers who signaled they may extend production cuts amid a decline in oil prices.  Libya’s oil production has reached 796,000 bpd. 

Algeria’s Energy Minister, Nouredine Bouterfa, will travel to Baghdad on May 10-11 for talks on OPEC issues with his Iraqi counterpart, as oil producers consider extending a global supply cut.  Algeria is supporting efforts to extend an OPEC/non-OPEC output cut agreement for nine months or more to help support oil prices.

Saudi Aramco will cut oil supplies to Asia by about 7 million barrels in June.  According to June nomination plans, Saudi Aramco will cut supplies by a million barrels each to Southeast Asia, China and South Korea.  It will also cut supplies by a little more than 3 million barrels for India and slightly less than a million barrels for Japan. 

Iraq’s recent increase in fuel oil exports is helping it comply with its crude output cuts under the OPEC production deal.  Iraq is exporting as much as 200,000 metric tons/month of fuel oil, up from 60,000 metric tons/month in 2016.  Previously, Iraq would inject fuel oil into its crude export stream, increasing its crude volumes.  However, Iraqi sources stated that since the beginning of 2017, SOMO started gradually reducing the quantity injected.  This has manifested itself into exports of about 200,000 metric tons/month of fuel oil from Khor Al-Zubair.   

Bloomberg reported that preliminary US waterborne crude imports fell by 1.1 million bpd to 4 million bpd in the week ending May 4th. 

IHS reported that crude and refined product shipments from the US Gulf reached 4.43 million metric tons on 105 ships in the week ending May 4th. 


Early Market Call - as of 9:00 AM EDT

WTI - June $46.56, up 67 cents

RBOB - June $1.5016, up 1.22 cents

HO - June $1.4565, up 1.44 cents


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Oil futures peaked after optimism that OPEC's agreement to cut output may continue

May 09, 2017

Recap:  Oil futures peaked early in the session after the Saudi oil minister expressed optimism that the agreement to cut output could be extended into the second half of the year and possibly into 2018, if need be. June WTI rose to $46.98 a barrel, for a gain of 1.6%, July Brent gained equally as much, peaking the session at $49.92 a barrel. Gains were short lived, as the realization that global supplies are still in abundance, and as U.S. production continues to rise. Prices briefly dipped below unchanged, while trading remained choppy throughout the session. June WTI settled at $46.43 a barrel, up 21 cents, or 0.45%, while Brent for July delivery rose 24 cents or 0.49%, to settle at $49.34 a barrel.

June RBOB rose 0.9% to $1.518 a gallon, while June heating oil added 1.3% to $1.456 a gallon.

Fundamental News According to sources, OPEC and non-OPEC producers are contemplating extending their production cut for nine months or more.  Saudi Arabia and Russia signaled they could extend production cuts into 2018.  Saudi Arabia’s Energy Minister, Khalid al-Falih, said that oil markets were rebalancing after years of oversupply.  However, he still expected an OPEC-led deal to cut output during the first half of the year to be extended to all of 2017.  Meanwhile, Russia’s Energy Minister, Alexander Novak, supported extending oil output cuts by leading producers for a longer period, saying it should help speed up the return to a healthier oil market.  He said he believed rising oil demand would make output cuts by OPEC and non-OPEC producers more effective in the coming months.  He also stated that he saw compliance with the OPEC/non-OPEC output agreement at 100% and that rising shale oil production was offset by increased demand and output cuts.  Separately, a Russian Energy Ministry spokeswoman said one of the options being discussed by Russia and leading world oil producers is extending oil output cuts beyond 2017.

Kuwait’s Oil Minister, Essam al-Marzouq, said oil producers taking part in the OPEC/non-OPEC oil output cut agreement are studying several options to extend it beyond June.  He said there is almost consensus about the importance of extending the agreement for at least six months and Kuwait supports all efforts by other countries in this direction. 

Brunei’s Energy Minister, Mohammed Yasmin Umar, said the country has no objection to extending the OPEC/non-OPEC output cut agreement.  He discussed the possibility of extending the agreement for another six months in a meeting with Saudi Arabia’s Energy Minister, Khalid al-Falih. 

The head of the National Iranian Oil Co, Gholam-Reza Manouchehri, said Iran wants to increase its oil output capacity by 3 million bpd in ten years. 

FGE Chairman, Fereidun Feshakari, said OPEC needs to deepen cuts by 500,000 to 700,000 bpd. 

Citigroup said OPEC may have to extend cuts for some time as more shale is produced.   

Goldman Sachs said US annual oil output will increase by an average 285,000 bpd in 2017.

The CEO of Kufprec, a unit of Kuwait Petroleum Corp, said shale production cannot meet the world’s oil needs. 

Libya’s National Oil Corp is selling its first cargo of Mellitah crude since 2015.  A 600,000 barrel cargo is due to load on May 19-21.  The Mellitah blend comes mainly from the El Feel oilfield that resumed production at the end of April after it was shut in April 2015 due to armed protesters blocking a key pipeline. 


Early Market Call - as of 9:00 AM EDT

WTI - June $46.18, down 25 cents 

RBOB - June $1.5108, down 70 points

HO - June $1.4520, down 33 points


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Brent and WTI fell to near 5 month lows in early morning trading on Friday

May 09, 2017

Recap:  It was another wild trading day in oil futures, as prices tumbled more than 3% on what was believed to be fund liquidation. Both Brent and WTI fell to near 5 month lows in early morning trading, with August Brent reaching a low of $46.98 a barrel, and June WTI touching $43.76 a barrel. By the time daylight broke in the West, both blends gave up losses, to trade above unchanged, after OPEC’s governor stated that OPEC and non-OPEC producers were close to agreeing on a deal to further cut supplies.  June WTI finished up 70 cents, or 1.54%, settling at $46.22 a barrel, while July Brent closed at $49.10 a barrel, up 72 cents or 1.49%.  

June RBOB rose 1.6% to $1.5046 a gallon; however, it posted a weekly loss of 2.8%, while June heating oil settled at $1.4366 a gallon, up 1.7%, but down 4.7% on the week.

Fundamental News:  Baker Hughes reported that the number of rigs searching for oil increased for the 16th consecutive week.  Drillers added six oil rigs in the week ending May 5th, bringing the total count up to 703, the most since April 2015.

According to analysts, OPEC has limited options when it meets on May 25th to discuss the extension of the output cut agreement as crude prices have instead declined since it agreed to cut production in November.  USB stated that even if OPEC were to deepen its cuts, even more shale supplies may come to fill the gap.  The risk of a larger cut is that it could trigger too strong an increase in prices and support US shale production.  Meanwhile, Citigroup predicts that abandoning the policy and restoring output would inflict the economic pain of crude below $40.  Separately, Commerzbank said if OPEC deepened the cut, the effect would be short-lived.  It said OPEC would find itself in the same position again in six months, while non-OPEC producers gain more market share by then. 

Saudi Arabia’s Oil Minister, Khalid al-Falih, met with his Russian counterpart and reiterated the view that they are optimistic that efforts will continue to rebalance the oil market. 

Separately, Saudi Arabia’s OPEC governor, Adeeb Al-Aama, said OPEC and other countries that agreed to cut crude production are converging on the need to extend the pact beyond June to help to clear the oversupply.  He said compliance with the cuts has been rising every month, reaching 98% in March. 

Russia’s Energy Minister, Alexander Novak, said the country believes  that for the market to fully recover it will be necessary to extend its agreement to cut output in conjunction with OPEC beyond June.  

Azerbaijan’s Energy Ministry reported that the country has fulfilled their oil output cut obligations with current output at 781,100 bpd.

Oil Movements reported that OPEC shipments will increase by 0.4% or 90,000 bpd to 23.97 million bpd in the four weeks ending May 20th.  

The Trans-Alaska Pipeline will shut down on May 6th for 18 hours to complete maintenance projects along the line. 

Mexico’s Pemex said that March crude exports fell to a record low of 1.001 million bpd, while oil production for the month also fell.  Meanwhile, crude production during the month fell by 9% to 2.018 million bpd. 


Early Market Call - as of 9:37 AM EDT

WTI - June $ 46.25 up 3 cents

RBOB - June $1.5140 up 94 points

HO - June $1.4419 up 53 points


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WTI tumbled as release of EIA report indicated a smaller draw in crude oil than expected

May 04, 2017

Recap:  Trading in oil futures was choppy on Wednesday, as traders continue to grapple with increasing U.S. production amid supply overhangs and OPEC’s adherence to the agreed upon output cuts. WTI tumbled 68 cents upon the immediate release of the EIA report, which reflected a drop of 930,000 barrels of crude oil, much less than the forecasted draw of 2.3 million barrels. Prompting the sell-off, was the year-on-year 2.7% slip in gasoline demand. What makes this number significant is that demand for gasoline has been falling since the onset of 2017, and with the U.S. summer driving season on the horizon, traders are focusing on this key factor. 

June WTI continued to seesaw around the unchanged ($47.66) level for the remainder of the session, eking out a gain of 16 cents, or 0.34%, to settle at $47.82 a barrel. Brent for July delivery tacked on 33 cents, or 0.65%, settling at $50.79 a barrel.

June RBOB rose by 1.3% to $1.534 a gallon, while June heating added 0.4% to $1.474 a gallon.

Fundamental News:  According to a Russian government official, the country considers it sensible to extend the existing deal with OPEC to cut crude production for at least six months.  Russia exceeded its target of cutting production by 300,000 bpd from October levels by 790 bpd on May 1st.  Russia’s oil production in April fell 0.5% on the month to 10.995 million bpd.  Russia will maintain that output level through June under the current deal.  The official said Russia is satisfied with the way global inventories are declining. 

Bloomberg reported that OPEC strengthened its compliance with production cuts in April.  Production fell by 40,000 bpd on the month to 31.895 million bpd.  Total output, including Libya and Nigeria, remained 135,000 bpd above its target, putting the group at about 90% in compliance with its agreement.  It reported that Iraq produced 4.41 million bpd, down 20,000 bpd.  Venezuela saw a 20,000 bpd decline in output to 1.98 million bpd while Saudi Arabia’s production was steady at 9.95 million bpd.  Libya’s oil output fell by 70,000 bpd in April, while Nigeria increased its output by 50,000 bpd on the month. 

Colonial Pipeline is allocating Cycle 27 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, said Saudi Arabia will retain full ownership of its oil and gas reserves and sole decision-making authority on production levels after Saudi Aramco’s initial public offering. 

Standard Chartered stated that US total oil production, including crude, NGLs and ethanol, will reach a record high this month.  Total output will average 14.18 million bpd in May. 

GMP FirstEnergy has cut its forecasts for WTI and Brent.  WTI is forecast at $56.50/barrel in 2017, down from a previous forecast of $58/barrel while Brent is forecast to average $59.03/barrel this year, down from $60.50/barrel. 

IIR reported that US oil refiners are expected to shut in 490,000 bpd of capacity in the week ending May 5th, increasing available refining capacity by 239,000 bpd from the previous week.  IIR expects offline capacity to fall to 471,000 bpd in the week ending May 12th. 

The Federal Reserve held short-term interest rates steady and offered little indication that recent softness in economic data would change its plans to proceed with gradual interest rate increases this year.  Following a two-day policy meeting, officials unanimously held their benchmark rate steady in a range between 0.75% and 1%, while noting that slow growth earlier this year was likely to be transitory. 


Early Market Call - as of 9:00 AM EDT

WTI - June  $46.98, down 85 cents

RBOB - June $1.5074, down 2.62 cents

HO - June $1.4525, down 2.10 cents


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Production in U.S. and Libya continue to erase oil future gains

May 03, 2017

Recap: Early morning gains in oil futures were erased on Tuesday, as increased production in the U.S. and Libya continue to test output cuts by OPEC and other major producers. Prices rose right out of the gate, with June WTI trading back above $49 a barrel, and July Brent breaching $52 a barrel. However, a steady decline ensued, with both blends dipping below unchanged, remaining there for the rest of the session. June WTI touched a low of $47.49 a barrel, while Brent hit $50.03 a barrel. June WTI settled at $47.66, down $1.148, or 2.42%, while July Brent fell $1.06, or 2.06%, to settle at $50.46 a barrel. This is the lowest settlement for WTI since March 21 and for Brent since November 29.

June RBOB fell 1.36 cents, or .9% to settle at $1.5136 a gallon, while June heating oil fell 1.98 cents, or 1.3%, settling at $1.468 a gallon.

Fundamental News:  According to Bloomberg, crude oil stocks held in Cushing, Oklahoma fell by 1.2 million barrels to 66.2 million barrels in the week ending April 28th.

Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, ruled out any talks with Iran, a country, he said, was plotting to control the Muslim world.  He said Saudi Arabia could crush Iran-aligned fighters in Yemen, where Saudi forces head a coalition of Gulf Arab states intervening in a civil war. 

According to Reuters survey, OPEC’s oil output fell for a fourth consecutive month in April falling to 31.97 million bpd as Nigeria and Libya produced less crude.  Reuters reported that compliance of 90% is still higher than it achieved in its last cut in 2009.  Saudi Arabia cut its output by 574,000 bpd. 

Russia’s Energy Ministry reported that the country’s oil output fell slightly in April by 0.5% to 10.995 million bpd.  It is still 1.6% higher than last year’s level.   

The UAE’s Energy Minister, Suhail Al-Mazrouei, said it would be logical to extend the oil output cuts.  He said all producers will need to commit to any extension of the cuts beyond June. 

Libya’s National Oil Corp said the country’s oil production had increased over 760,000 bpd to its highest level since December 2014. 

The Chairman of consultants FGE, Fereidun Fesharaki, said OPEC producers are 100% certain to extend the output deal at its May 25th OPEC ministerial meeting in Vienna.  He said that while a six month deal was initially envisaged, OPEC may need cut its output until well into 2018, as work on cutting global inventories continues, or they risk oil prices falling back to $40/barrel if stocks, particularly in the US, increase. 

BP’s Chief Financial Officer, Brian Gilvary, said oil inventories would keep falling this year.  He said an extension of the OPEC-led output cuts into the second half of the year would help bring global oil inventories back to a five-year average by the end of the year and support prices at about $55/barrel. 

Bloomberg reported that preliminary US waterborne crude imports fell by 1.6 million bpd to 4.5 million bpd in the week ending April 27th.  Total crude and product imports also fell by 1.6 million bpd to 6.5 million bpd. 

Genscape reported that waterborne US crude exports increased by 5.662 million barrels to 9.025 million barrels or 1.289 million bpd in the week ending April 21st.  The largest portion of the US exports of 3.01 million barrels on two ships were bound for East Asia.  Refiners in the Caribbean were set to take in 2.42 million barrels of crude. 


Early Market Call - as of 9:50 AM EDT

WTI - June $47.84, up 18 cents

RBOB - June $1.5295, up 1.55 cents

HO - June $1.4696, up 15 points


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Oil futures hit lowest level in five weeks as output in Libya gains traction

May 02, 2017

Recap: Oil futures settled at their lowest level in five weeks on Monday, as U.S. production continues to rise and as output in Libya gains traction. Both Brent and WTI were unable to muster enough strength to trade above unchanged in early morning trading and by 9:00am EST, the lows of the day were established, with prices making only slight rebounds. June WTI fell 49 cents, or 0.99%, to settle at $48.84 a barrel, while Brent for July delivery slipped 53 cents, or 1.02%, settling at $51.52 a barrel.

June RBOB fell 2.11 cents, or 1.4% to settle at $1.527 a gallon, while June heating oil fell 1.92 cents, or 1.3%, settling at $1.488 a gallon.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, April 28th fell by 1,246,350 barrels on the week and by 378,707 barrels from Tuesday, April 25th to 68,679,455 barrels.

The IEA stated in its latest monthly report that oil stocks in industrialized countries were about 336 million barrels above the five-year average. 

Iran’s President Hassan Rouhani said the country is now self-sufficient in petroleum production as he opened a refinery in the southern city of Bandar Abbas.  The refinery has the capacity to produce 12 million liters of Euro IV petrol.  Once fully operational, the refinery will produce 36 million liters of petrol. 

Libya’s crude production rebounded to more than 700,000 bpd as the Sharara field resumed operations.  The Sharara field is currently producing 216,400 bpd while the El Feel or Elephant oilfield is producing 26,500 bpd and is expected to increase its output further. 

The UAE is cutting supplies to customers in June as part of its agreement with OPEC to cut production.  Abu Dhabi National Oil Co will reduce sales by 10%. 

According to JBC Energy, OPEC’s oil production in April fell by 20,000 bpd to 31.72 million bpd.  OPEC’s production in March was revised down by 300,000 bpd to 31.74 million bpd. 

Suncor Energy Inc confirmed the restart of pipeline shipments from the Syncrude Mildred Lake oil sands facility.  It said shipments are currently at about 140,000 bpd and are expected to ramp up as additional units complete turnaround activities.  Production is expected to return to full rates in June. 

IIR reported that US oil refiners are expected to shut in 414,000 bpd of capacity in the week ending May 5th, increasing available refining capacity by 268,000 bpd from the previous week.  IIR expects offline capacity to increase to 471,000 bpd in the week ending May 12th. 


Early Market Call - as of 9:00 AM EDT

WTI - June $48.77, down 8 cents

RBOB - June $1.5337, up 65 points

HO - June $1.4904, up 24 points


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Oil futures rebounded on Friday on hopes OPEC will extend agreement to cut output

May 01, 2017

Recap: Oil futures rebounded on Friday after reaching a one-month low on Thursday, trading higher on growing optimism OPEC will extend its six-month agreement to cut output. June WTI gained as much as 1.6%, and June Brent tacked on as much as 1.3% during the trading session. Due to the recent negative sentiment, the upside was unable to gain momentum, a sell-off followed, with prices making fresh session lows. End of the month squaring came into play, with prices retracing some of the daily losses, to finish up on the day. June WTI settled at $49.33 a barrel, a gain of 36 cents, or 0.74%. June Brent finished up 29 cents, or 0.56%, settling at $51.73 a barrel.

May RBOB fell by 2.5% to $1.55 a gallon and May heating oil lost 1.9% to $1.507 a gallon. The May contracts for both products expired at the end of Friday’s session.

Fundamental News:  Baker Hughes reported that the number of rigs searching for oil increased by 9 to 697 rigs in the week ending April 28th.

OPEC’s Secretary General, Mohammad Barkindo, said the oil market will reach a balance between supply and demand in the second half of the year.  He said the land-based inventory surplus in developed economies fell from February to March by about 39 million barrels.

Russia’s Energy Minister, Alexander Novak, said the country has fully implemented the production it promised in a December deal with OPEC.  The country’s output reduction has reached the agreed 300,000 bpd.  He added that Russia will define its position on an extension of an output cut agreement by May 24th.  He said he discussed the oil market with Venezuela’s Oil Minister and added that he is discussing a possible meeting with his Saudi counterpart.  Meanwhile, Saudi Arabia’s Energy Minister, Khalid al-Falih, welcomed the news, saying Russia’s contribution was good and that overall non-OPEC compliance was 85% while OPEC members’ compliance was 100%.  He also stated that global oil demand in the second half of the year was likely to be higher than the first half of the year.   

OPEC reported that its members and non-OPEC producers who agreed to cut production reached 98% conformity with their targets in March, compared with 94% in February. 

Petrologistics reported that Saudi Arabia’s crude exports fell by 330,000 bpd in April from the previous month. 

Libya’s National Oil Co confirmed it lifted the force majeure at the Zawiya oil port.  It also stated that Sharara will immediately add 200,000 bpd of production after it resumed operations.  Libya’s 80,000 bpd El Feel oilfield, which depends on power supply from Sharara, is also expected to restart operations.

The EIA reported that US oil production in February increased by 193,000 bpd to 9.03 million bpd.  January’s crude production was revised up by 3,000 bpd to 8.84 million bpd.  Output in North Dakota increased by 43,000 bpd while production in Texas increased by 119,000 bpd.  Production offshore in the US Gulf fell by 22,000 bpd.  It reported that US gasoline demand fell by 2.4% or 218,000 bpd in February from a year earlier to 8.988 million bpd.  Distillate demand fell by 1.4% or 54,000 bpd to 3.905 million bpd.  US total oil demand in February fell by 2.5% or 492,000 bpd on the year to 19.18 million bpd.    


Early Market Call - as of 9:00 AM EDT

WTI - June $48.96, down 37 cents

RBOB - May $1.5410, down 71 points

HO - May $1.4952, down 1.18 cents


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Oil futures hit one month low after Libya's Sharara oil field restarted crude through pipeline

April 28, 2017

Recap: Oil futures fell to a one month low after the European Central Bank left interest rates unchanged, and as oil began to flow through one of Libya’s pipelines. Both of these factors had a domino effect on the U.S. dollar, which also aided in pressuring oil prices. Futures fell as much as 2.8% prior to paring losses. June WTI settled at $48.97 a barrel, down 65 cents, or 1.31%. Brent for June delivery slipped 38 cents, or 0.73%, to settle at $51.44.

May RBOB fell by 2.5% to $1.55 a gallon and May heating oil lost 1.9% to $1.507 a gallon. The May contracts for both products will expire at the end of Friday’s session.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, April 25th fell by 1,213,327 barrels on the week and by 867,643 barrels from Friday, April 21st to 69,058,162 barrels.

OPEC’s Secretary General, Mohammad Barkindo, said an overhang in global oil inventories was declining but stockpiles still need to fall closer to the five year average.  However, he said market rebalancing is heading in the right direction. 

Saudi Arabia’s Energy Minister, Khalid al-Falih said that he will talk with Russia’s Energy Minister, Alexander Novak, by phone this week and meet him within the next two weeks.  Venezuela’s Oil Minister, Nelson Martinez, was also planning to visit Moscow after talks in Algeria on April 26th.  Separately, Saudi Arabia’s Oil Minister and Azerbaijan’s Energy Minister agreed to support a global oil output cut deal. 

Iraq’s Oil Minister, Jaber al-Luaibi, said the country will go with the consensus reached by OPEC when the oil exporter group meets in Vienna next month to discuss extending production cuts.  Iraq believes it would be acceptable for the output cut agreement to remain in place beyond June.  He said Iraq was in full compliance with the OPEC-led supply agreement reached last year and has achieved about 97% of its output reduction target.  He added that the OPEC-led cuts were gradually leading to a long-awaited rebalancing of the oil market. 

Angola’s Oil Minister, Jose Maria Botelho de Vasconcelos, said he believed the OPEC/non-OPEC output cut agreement will be extended beyond June. 

Saudi Aramco’s CEO, Amin Nasser, said oil demand growth will continue to remain healthy for the foreseeable future and added that the idea of peak oil demand is as misleading as theories on peak supply.  He said the oil market is moving towards a balance with the help of an agreement reached between OPEC and non-OPEC producers.  He also stated that the oil industry needed to continue investing in long-term projects despite short term price volatility.   

Libya’s 300,000 bpd Sharara oilfield restarted as crude began to move through a pipeline connected to the Zawiya refinery after the end of protests by an armed group.  The pipeline carrying Sharara crude to the Zawiya refinery had been blocked in early April, halting production.  No details were immediately available about current output at the field.  A force majeure on exports of the grade was lifted on Thursday.  A Libyan oil source said the El Feel oilfield, with a capacity of 90,000 bpd, was also restarted.  Libya’s National Oil Corp is aiming to raise the country’s output to 1.1 million bpd in August from a current level of 491,000 bpd.  Meanwhile, there is an OPEC consensus that Libya should remain exempt from production cuts. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.38, up 41 cents

RBOB - May $1.5659, up 1.44 cents

HO - May $1.5115, up 41 points


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