Recap: Oil prices rebounded on Tuesday as traders awaited the release of U.S. inventory numbers, which are expected to show a 3.5 million barrel draw in U.S. crude oil inventories. The expiration of the September WTI contract also provided strength, as shorts had to cover.
Since the middle of June, prices have been stuck in a range between $42.00 and $50.00. Support has been provided by the proposed output cuts from within OPEC and some other major producers, while rising U.S. production has kept prices below $50.00. WTI settled at $47.64 a barrel, up 27 cents, or 0.57%. October Brent tacked on 21 cents, or 0.41%, to settle at $51.87 a barrel.
September RBOB finished close to unchanged, settling at $1.5908 a gallon, up less than half a cent, or 0.4%. Heating oil for September delivery gained 2 cents, or 1.3%, to settle at $1.5912 a gallon.
Fundamental News: Bloomberg reported that crude oil stocks held in Cushing, Oklahoma increased by 300,000 barrels to 57.3 million barrels in the week ending August 18th.
Kuwait’s Oil Minister, Issam Almarzooq, said OPEC and non-OPEC producers will discuss whether to extend or end their crude output cut agreement after it expires in March at an OPEC meeting on November 30th. He said the group is still working to cut global oil inventories below a five-year average. He said the cuts are working well, but shale production gains are limiting an oil price gain. Separately, sources stated that the next meeting of a ministerial committee of OPEC and non-OPEC states monitoring compliance with their pact to cut output has been proposed for September 22nd in Vienna. The proposal is awaiting approval by the ministers on the panel, which includes Kuwait, Algeria, Venezuela and non-OPEC Russia and Oman.
Libya’s Sharara oilfield was gradually restarting on Tuesday after repeated disruptions causing production shutdown. Earlier on Tuesday, the National Oil Corp announced that it shut the pipeline hours after reopening it following a three-day shutdown due to a pipeline valve shut-in. The shutdown was due to action by a different group to the one that caused a closure at a valve leading from Sharara to Zawiya terminal on Saturday. Libya’s National Oil Corp said it lifted a force majeure on loadings of Sharara crude from the Zawiya oil terminal.
Saudi Arabia’s oil exports to US Gulf Coast refiners in early August fell to 264,000 bpd after falling by 32% on the year to 469,000 bpd in July, according to US customs data.
Exports of Venezuelan crude, the main source of income for the country, fell 24% in the first half of August, increasing concerns that the country will not be able to make $3.53 billion in upcoming debt payments. Tankers loaded 1.27 million bpd of Venezuelan crude from August 1st to August 15th, down from 1.68 million bpd in the same period last year.
According to customs data compiled by Bloomberg, the Gulf Coast led a decline in preliminary US waterborne crude imports last week, falling by 344,400 bpd to 2.37 million bpd. Total US imports fell by 163,700 bpd to 4.36 million bpd in the week ending August 18th. West Coast imports increased by 297,800 bpd while East Coast imports fell by 177,100 bpd to 760,800 bpd. Total crude and product imports fell by 569,500 bpd to 5.65 million bpd.
Western Canadian crude storage levels increased in July and August. According to Genscape, inventories at monitored storage locations in Western Canada increased by 3.4 million barrels between the weeks ending July 7th and August 11th. Storage levels increased four out of the five weeks.
Early Market Call - as of 9:10 AM EDT
WTI - Sep $47.67, down 16 cents
RBOB - Sep $1.5907, down 1 point
HO - Sep $1.5968, up 52 points
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