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Market Intel Archives

Oversupply concerns continued to impact the oil market on Tuesday

June 21, 2017

Recap:  On Tuesday, the oil market sold off sharply as oversupply concerns continued to impact prices.  The July crude contract, on its last trading session as the spot contract, posted a high of $44.40 overnight before it tumbled and extended its losses to $1.45 as it posted a low of $45.42 by mid-morning.  The market later retraced some of its losses during the remainder of the session and settled down 97 cents at $43.23.  It is interesting to note that since June 1st of last year, there were 266 trading days and there were only 21 of those days when the market settled at $43.50 or lower.  The August crude contract settled down 92 cents at $43.51 while the August Brent contract settled down 89 cents at $46.02.  Meanwhile, the product markets also settled in negative territory, with the heating oil market settling down 2.66 cents at $1.4240 and the RBOB market settling down 2.66 cents at $1.4240.

Fundamental News:  According to Bloomberg, crude stocks held in Cushing, Oklahoma are expected to fall by 850,000 barrels to 61.35 million barrels in the week ending June 16th.

Louisiana Offshore Oil Port LLC said it suspended vessel offloading operations at its marine terminal ahead of Tropical Storm Cindy, which formed in the Gulf of Mexico and threatened to hit refining and production centers.   Meanwhile, Exxon Mobil Corp, Phillips 66 and Motiva Enterprises have stated that the potential storm has not yet impacted operations at its facilities.  Royal Dutch Shell said some offshore well operations had been suspended but production was currently unaffected.  According to the National Hurricane Center, it is expected to approach the coast of southwest Louisiana late Wednesday or Wednesday night and move inland over western Louisiana and eastern Texas on Thursday.   

OPEC and non-OPEC oil producers’ compliance with a deal to cut output has reached its highest in May since they agreed on the cuts last year, reaching 106% in May.  OPEC compliance with the output cuts in May was 108%, while non-OPEC compliance was 100%. 

Russia’s Energy Minister, Alexander Novak, said there are no plans for Russia to have an extraordinary meeting with OPEC and US shale producers.  He also said he did not believe that a monitoring committee meeting of OPEC and non-OPEC producers scheduled to take place next month in Russia could be expanded into a broader meeting between producers. 

Rystad Energy stated that Saudi Arabia increased its recoverable oil resources by 73 billion barrels this year after lower tax rates for Saudi Aramco increased the country’s estimated prospective resources.  The new recoverable contingent resources took Saudi Arabia’s total recoverable oil resources to 276 billion barrels.  In the US, recoverable oil resources increased 13 billion barrels with unconventional shale making up over 50% of the country’s total oil resources, estimated at 263 billion barrels.  Globally, the world’s total recoverable oil resources have increased 29 billion barrels since 2016 to 2.2 trillion barrels. 

Libya’s National Oil Corp said production at Libya’s Sharara oil field has recovered to 270,000 bpd, the same level as before it was shut last month. 

According to data from cFlow, S&P Global Platts trade flow software, expected arrivals of distillates into Europe and the Mediterranean basin in June from the US Gulf Coast are around 1.45 million metric tons. 

IHS reported that crude and refined product shipments from the US Gulf increased to 4.32 million metric tons on 102 ships in the week ending June 15th.  It is up 3.1% from the previous week’s 4.19 million metric tons on 100 ships. 


Early Market Call - as of 9:00 AM EDT

WTI - July $43.62, up 11 cents

RBOB - July $1.4286, up 45 points

HO - July $1.4006, up 52 points


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Increased production in Libya and Nigeria continues to erase market gains

June 20, 2017

Recap:  At the onset of trading, oil futures climbed higher on follow through buying from Friday. August WTI reached a high of $45.28, up 31 cents, or 0.6%, while its European counterpart rose 39 cents, or 0.8%, to a high of $47.76. However, the ever increasing number of active US oil rigs, combined with increasing Libyan and Nigerian production is making it difficult for this market to hold onto to gains. Prices came under pressure, falling below unchanged, where they remained for the remainder of the session. August WTI settled at $44.43, down 54 cents, or 0.95%. Brent for August delivery fell 46 cents, or 0.97%, to settle at $46.91.

Brent’s premium over WTI rose to its widest in more than 3 weeks on Monday. This spread hit a low of -$2.50, its lowest level since May 26.

July RBOB fell 0.42 cent, or 0.3%, to $14506 a gallon, while July heating oil declined 1.59 cents, or 1.1%, to $1.411 a gallon.

Fundamental News Saudi Arabia’s Energy Minister, Khalid al-Falih, said the oil market is heading in the right direction but still needs time to rebalance.  He said the oil market is expected to balance in the fourth quarter even as output from Libya and Nigeria as well as from shale oil producers is increasing.  He said there was a relatively large draw of around 50 million barrels from floating storage and a decline in industrialized nations’ onshore storage of 65 million barrels compared to July last year.

According to Bloomberg Intelligence, most OPEC countries are failing to comply with the Saudi Arabia-led push to cut output and cut the world’s oversupply.  Saudi Arabia produced 9.94 million bpd in May, 178,000 bpd below the mandated level.  However, this was not enough to offset a cumulative 397,000 bpd surplus from Venezuela, Iraq and the UAE.   

According to the Joint Organizations Data Initiative, Saudi Arabia’s oil exports fell by 226,000 bpd to 7.006 million bpd in April from 7.232 million bpd in March.    Saudi Arabia produced 9.946 million bpd in April, up from 9.9 million bpd in March.  Saudi Arabia’s crude inventories fell by 3.927 million barrels to 263.927 million barrels in April from 267.854 million barrels in March.  Saudi’s local refineries processed 2.651 million bpd in April, up from 2.261 million bpd in March.  It also reported that Iraq’s oil exports fell to 3.75 million bpd in April, down from 3.78 million bpd the previous month. 

Kazakhstan agreed to the extension of OPEC-led oil production cuts, even as it ramps up its long-delayed Kashagan field, because it’s counting on the deal to increase oil prices. 

Libya is producing the most oil in four years after a deal with Wintershall enabled at least two fields to resume production, adding to the challenge that OPEC and allied producers face in trying to pare global crude inventories.  Libya’s oil production has increased by over 50,000 bpd to 885,000 bpd.   

Angola is scheduled to export 52 cargoes or 1.61 million bpd of crude in August.  It is up from 1.55 million bpd in 50 cargoes scheduled for July.

The EIA reported that US refiners imported 62.6 million barrels of crude from Venezuela in the first quarter.   

Morgan Stanley analysts stated that OPEC will need to continue its current supply quota for all of 2018 to prevent any inventory increase unless rig counts decline substantially.


Early Market Call - as of 9:00 AM EDT

WTI - July $43.12 down $1.00

RBOB - July $1.4268, down 2.36 cents

HO - July $1.3938, down 1.74 cents


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Oil prices continued to fall for the fourth straight week

June 19, 2017

Recap:  Oil prices recouped some of this week’s losses on Friday after hitting six-month lows on Thursday. However, this was not enough to stem prices from falling for the fourth straight week. July WTI gained 28 cents, or 0.63%, to settle at $44.74 a barrel, a fresh seven-month low, while Brent for August delivery settled at $47.37 a barrel, up 45 cents, or 0.96%.

July RBOB rose 1.9 cents, or 1.3%, at $1.455 a gallon—though finishing down about 3.1% on the week, and July heating added 1.2 cents, or 0.9%, to $1.427 a gallon, paring its weekly loss to about 0.3%.

Fundamental News:  Baker Hughes reported that oil companies added oil rigs for a record 22nd week in a row.  Drillers added six oil rigs in the week ending June 16th, bringing the total count up to 747, the most since April 2015.  This is compared with 337 rigs in the same week a year ago. 

Oil Movements reported that OPEC shipments are set to increase by 270,000 bpd to 24.39 million bpd in the four weeks ending July 1st compared with the four week period ending June 3rd.

Russia’s oil production in June stood at 10.94 million bpd, which was in line with the OPEC/non-OPEC output cut agreement. 

Kazakhstan’s Energy Minister, Kanat Bozumbayev, will comply with the global oil output reduction deal in June and July after overproducing for three consecutive months.  

Libya’s National Oil Co said the country’s oil output is expected to reach 900,000 bpd in two days.  The country’s oil production will then reach 1 million bpd by the end of July, the first time it has reached that milestone since 2013. 

According to Bloomberg, waterborne crude imports to the US East Coast reached their highest level since at least 2013 in May.  The bills of lading show that Padd 1 imports increased to nearly 1.05 million bpd.  This increase is likely to further erode demand for domestic grades such as Bakken and WTI.

Diesel exports from the US to Europe are expected to see a sharp increase in June to levels not seen in nearly two years, as refineries on the Gulf Coast pump at near record levels.  A stream of tankers is set to cross the Atlantic from US’ refining hubs in Texas and Louisiana in June, carrying more than 2 million tons of diesel, the highest level since July 2015.   

Tanker firm, Frontline, expects an increasing number of supertankers to be used for storing crude in anticipation of higher oil prices. 

IIR reported that US oil refiners are estimated to shut in 194,000 bpd of capacity in the week ending June 16th, increasing available refining capacity by 259,000 bpd from the previous week.  IIR expects offline capacity to increase to 339,000 bpd in the week ending June 23rd but fall to 90,000 bpd in the following week. 

Early Market Call - as of 9:00 AM EDT

WTI - July $44.90, up 15 cents

RBOB - July $1.4645, up 97 points

HO - July $1.4342, up 72 points


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Oil futures hit six week low weighed down by persistent global supply overhangs

June 16, 2017

Recap:  Oil futures fell to a six week low on Thursday, weighed down by persistent global supply overhangs despite OPEC efforts to remove the overage. July WTI fell 41 cents to a low of $44.32 a barrel, while August Brent hit a low of $46.70 a barrel, down 30 cents. July WTI remained below $45 a barrel, putting the 16,274 puts into play, while settling just below $44.50, which held an open interest of 5,595 in puts, exercising those as well. July WTI settled at $44.46 a barrel, down 27 cents, or 0.60%. August Brent fell 8 cents, or 0.17%, to settle at $46.92 a barrel.

The discount in long dated spreads for both WTI and Brent continues to widen, with Dec17/Dec18 WTI widening to as much as -$1.82, its lowest level since Nov. 14. Dec17/Dec18 Brent slipped to -$2.12, its lowest level since Nov. 15. The widening of these spreads indicates that traders believe a rebalancing of this market may be slower than originally thought. 

July RBOB fell less than half a cent, to settle at $1.436 a gallon, while July heating oil settled at $1.415 a gallon.

Fundamental News Saudi Arabia’s crude exports are expected to fall below 7 million bpd this summer.  Exports in May averaged below 7 million bpd and early indications suggest that remains the case for this month.  Lower exports could help reduce high inventories in the US.  Overall, Saudi Arabia’s exports are set to be lower than last year, when the kingdom shipped about 7.4 million bpd on average from May to August.

PIRA Energy stated that OPEC and non-OPEC producers should have deepened its production cuts in May.  PIRA’s Gary Ross said OPEC should have agreed to cut an additional 1 million bpd for 90 days when they last met to create oil-price backwardation. 

Libya’s National Oil Corp in Benghazi has ordered a halt to exports arranged by Glencore from the port of Hariga, although oil officials said the terminal was working normally.  The NOC in Benghazi, which has repeatedly tried and failed to impose control over oil exports from the NOC in Tripoli, published the order late on Wednesday.  However, a spokesman from Arabian Gulf Oil Co, which operates exports of Messla and Sarir crude from Hariga, said it had not received the instruction. 

Saudi Arabia and the UAE are expected to announce what they want Qatar to do in return for ending their isolation of the country.  The proposals, which may come in the next two days, would make it easier to end the dispute.

Some US shale producers claim they can produce oil profitably with prices well below $50/barrel or even $45/barrel.  Baker Hughes reported shale firms have hired an extra 425 rigs to drill for oil since the end of May 2016, more than doubling the active rig count.  Producers have continued adding rigs even though benchmark oil prices have fallen almost $10/barrel since the middle of February and are now almost $4/barrel below year ago levels.  The EIA forecast that onshore production from the Lower 48 states will grow by 340,000 bpd in 2017 and another 500,000 bpd in 2018.  As a result, US shale producers together with other non-OPEC suppliers are expected to capture all of the increase in the global oil demand in 2018 and raise their share of the market significantly at the expense of OPEC. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp hub in the week ending June 15th fell by 0.22% on the week and by 14.67% on the year to 890,000 tons, while gasoil stocks increased by 3.56% on the week but fell by 11.36% on the year to 2.793 million tons. 


Early Market Call - as of 9:00 AM EDT

WTI - July $44.80, up 34 cents

RBOB - July $1.4543, up 1.87 cents

HO - July $1.4312, up 1.63 cents


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Oil market sold off sharply following the release of the EIA's weekly inventory report

June 15, 2017

Recap: The oil market opened lower and rallied to a high of $46.49 ahead of the release of the EIA’s weekly inventory report.  However, the market sold off sharply following the report, which showed a smaller than expected decline in oil stocks of 1.661 million barrels, compared with expectations of a 2 million barrel draw.  The report failed to convince the market that the oversupply is easing.  The market tumbled to a low of $44.54, the lowest level since May 5th.  The crude market later bounced off its low and settled in a sideways trading pattern ahead of the close.  The July WTI settled down $1.73 at $44.73 while the August Brent contract settled down $1.72 at $47.00.  Meanwhile, the product markets also sold off sharply, with the heating oil market settling down 3.75 cents at $1.4102 and the RBOB market settling down 6.68 cents at $1.4327.  The markets were pressured in light of the EIA reporting a larger than expected build in distillate stocks of 328,000 barrels and an unexpected build of 2.096 million barrels in gasoline stocks. 

Fundamental News:  The EIA reported that US Midwest refinery utilization increased to 98.7% in the week ending June 9th, a record high for June.  It also reported that crude exports increased to 722,000 bpd on the week from 557,000 bpd a week earlier.  US crude production increased to 9.33 million bpd, up 12,000 bpd on the week.

The IEA stated in its monthly report that growth in oil supply next year is expected to outpace an anticipated increase in demand that will push global consumption above 100 million bpd for the first time.  The IEA said non-OPEC production is expected to increase by 700,000 bpd this year and by 1.5 million bpd in 2018.  OECD oil inventories in April increased by 18.6 million barrels to 3.045 billion barrels, due to higher refinery output and imports.  The IEA said stocks were 292 million barrels above the five year average.  It stated that production cuts by OPEC and non-OPEC producers are failing to cut global oil inventories, with stockpiles increasing by more than the seasonal norm in April.  Global crude demand is expected to increase by 1.4 million bpd in 2018 compared with 1.3 million bpd in 2017.  Crude demand is expected to average a record 99.27 million bpd in 2018 compared with 97.84 million bpd in 2017.  The IEA reported that new oil supplies from non-OPEC producers will be more than enough to meet growth in demand next year.  It said the US, Brazil, Canada and other producers outside OPEC will increase its output next year by the most in four years.  The IEA also reported that OPEC crude production increased by 290,000 bpd in May to 32.08 million bpd.  Global oil supply increased by 585,000 bpd in May to 96.69 million bpd.      

Saudi Aramco’s major buyers in Asia are receiving full allocations for Saudi crude oil loading in July, with some Japanese refiners receiving higher volumes. 

Vessel-tracking and port data showed that for the first five months of 2017, OPEC exported 25.6 million bpd.  In May, OPEC shipments totaled 25.6 million bpd, up from April’s 25.02 million bpd. 

Nigeria’s crude exports are set to reach 1.84 million bpd in July, slightly higher on the month, due to a recovery in Forcados exports. 

Several tankers have been booked over the past day to ship diesel from the US Gulf Coast to Europe and the Mediterranean as demand from Latin America fell in recent weeks and US refineries operate at near record levels.  Imports from the US were expected to reach 1.9 million tons in June, significantly higher than in previous months. 

IIR reported that US oil refiners are expected to shut in 126,000 bpd of capacity in the week ending June 16th, increasing available refining capacity by 327,000 bpd from the previous week.  IIR expects offline capacity to increase to 253,000 bpd in the week ending June 23rd. 


Early Market Call - as of 9:00 AM EDT

WTI - July  $44.49, down 25 cents 

RBOB - July $1.4221, down 1.05 cents 

HO - July $1.4078, down 26 points


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Oil futures rose on Tuesday despite a rise in OPEC production for May

June 14, 2017

Recap:  After opening below unchanged, oil futures rose on Tuesday on what appeared to be technical buying, despite reports that OPEC production rose in the month of May. Skepticism over OPEC’s efforts to stem global oversupplies contained gains, with both WTI and Brent unable to trade above Monday’s high. July WTI settled at $46.46 a barrel, up 38 cents or 0.82%. Brent for August delivery tacked on 43 cents, or 0.89%, to settle at $48.72.

July RBOB rose 1.2 cents, or 0.8%, to $1.500 a gallon, while July heating oil gained 2.2 cents, or 1.6%, to $1.448 a gallon.

Fundamental News:  Bloomberg reported that crude stocks held in Cushing, Oklahoma fell by 1.4 million barrels in the week ending June 9th to 62 million barrels.

In its monthly report, OPEC stated that a long-awaited rebalancing of the oil market was underway at a slower pace than previously expected and added that its own output in May increased due to gains in nations exempt from the output cut agreement.  OPEC stated that its output in May increased by 336,000 bpd to 32.14 million bpd led by a rebound in Nigeria and Libya.  OPEC noted continued high compliance by its members with the supply deal and said oil stocks in OECD nations fell in April.  Supply from the 11 OPEC members with production targets under the accord, except Libya and Nigeria, averaged 29.729 million bpd in May.  OPEC said oil inventories in industrialized countries fell in April and would extend a decline for the rest of the year, but a recovery in production in the US was slowing efforts to get rid of excess supply.  OPEC lowered its estimate of supply growth from non-OPEC producers this year to 840,000 bpd from a previous forecast of 950,000 bpd, following a decision to extend the supply cut deal.  As a result, OPEC raised the expected demand for its crude this year by 100,000 bpd to 32.02 million bpd.   

Libya’s National Oil Corp warned authorities based in the east of the country not to use a rift between several Arab countries and Qatar as a pretext for exporting oil illegally.  The statement came after authorities in eastern Libya threatened to block operations by Glencore.  Any such move would put at risk a partial recovery in Libya’s oil production, which recently increased to over 800,000 bpd. 

Russia’s President Vladimir Putin and Saudi Arabia’s King Salman discussed the Qatar crisis in a phone call on Tuesday.

The EIA reported that proved oil reserves fell in 2016 for the second consecutive year.  The net reduction was 8.2 billion barrels year on year.   

According to Bloomberg, preliminary US waterborne crude imports fell by 449,100 bpd to 4.3 million bpd in the week ending June 8th.  The East Coast and Gulf Coast reported declines of 117,100 bpd and 403,700 bpd, respectively.  Imports to the West Coast increased by 71,700 bpd to 716,400 bpd.  Total crude and product imports fell by 325,900 bpd to 6.4 million bpd. 

IHS reported that crude and refined product shipments from the US Gulf fell to 4.19 million metric tons on 100 ships in the week ending June 8th.  It is down 10% from the previous week’s 4.63 million metric tons shipped on 111 ships. 

According to cFlow, S&P Global Platts trade flow software, arrivals of distillates in Europe in June from the US Gulf Coast are expected to total about 1.3 million metric tons.


Early Market Call - as of 9:14 AM EDT

WTI - July $46.22 down 24 cents

RBOB - July $1.4910 down 85 points

HO - July $1.4491 up 14 points


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Oil futures rose on Monday, but gains were pared due to build in US crude oil inventories

June 13, 2017

Recap:  Oil futures rose on Monday, however, gains were pared prior to settlement on expectations of a slight build in U.S. crude oil inventories. July WTI gained as much as 1.9%, or 88 cents and August Brent tacked on 2%, before giving up some of their gains. WTI settled at $46.08 a barrel, up 25 cents, or 0.65, while August Brent tacked on 14 cents, or 0.3%, to settle at $48.29 a barrel. 

July RBOB settled at $1.488 a gallon, down 1.4 cents, or 0.9%, while July heating oil fell just over half a penny, or 0.4%, to $1.425 a gallon.

Fundamental News:  Genscape reported that crude oil inventories held in Cushing, Oklahoma in the week ending Friday, June 9th fell by 1,838,715 barrels on the week and by 407,747 barrels from Tuesday, June 6th to 64,444,217 barrels.

Saudi Arabia’s Oil Minister, Khalid Al-Falih, said the country does not see any need for changes to the OPEC/non-OPEC output cut agreement.  He said additional cuts are not necessary and added that the oil market will stabilize in the next few months.  He said a drawdown in crude inventories will accelerate in the next three to four months. 

Saudi Arabia will limit volumes of crude to some Asian buyers in July and deepen cuts in allocations to the US.  Saudi Aramco would supply full contracted volumes to at least five Asian buyers mainly in North Asia and lower volumes for some customers in India, China and South Korea.  Cuts in crude allocations to Asia in July would total about 300,000 bpd, more than in June.  Meanwhile, sources stated that crude allocations to the US have been lowered significantly and Aramco continued to curtail supply to Europe.    

Russia’s Energy Minister, Alexander Novak, said there is no need for an extraordinary OPEC meeting.  He also stated that the agreement to cut production and balance the market will achieve its objective in the first quarter of next year. 

Qatar said it is committed to the oil production cut agreement.  Qatar’s Energy Minister, Mohammed Al Sada, said the current circumstances in the region will not prevent Qatar from honoring its international commitment of cutting production under the OPEC/non-OPEC agreement. 

Iran’s Deputy Oil Minister and Managing Director of National Iranian Oil Co, Ali Kardor, said Iran will sign $15 billion of oil contracts by March 2018.  Priority will be given to the offshore South Pars gas fields and associated oil as well as the Azadegan oil field. 

Bernstein analysts stated that if OPEC producers are expected to achieve the goal of bringing back inventories to their 5 year average level, average weekly US crude draws of 4 million barrels are needed consistently for the rest of the year, with draws of 5 million barrels over the summer months.   

According to Euroilstock, crude oil intake at Europe’s refineries in May fell by 2.4% on the month but increased by 5.4% on the year to 10.175 million bpd.  European crude and oil products stocks in May fell by 0.1% on the month and by 0.5% on the year to 1.16 billion barrels.  It reported that European crude stocks increased by 0.4% on the month and by 0.2% on the year to 491.29 million barrels while gasoline stocks fell by 2.1% on the month and by 1.4% on the year to 119.6 million barrels and middle distillate stocks increased by 0.3% on the month and by 1.4% on the year to 453.9 million barrels. 

According to IIR, US oil refiners are expected to shut in 135,000 bpd of capacity in the week ending June 16th, increasing available refining capacity by 313,000 bpd from the previous week.  IIR expects offline capacity to fall to 253,000 bpd in the week ending June 23rd. 


Early Market Call - as of 9:00 AM EDT

WTI - July $45.93, down 15 cents

RBOB - July $1.4777, down 1.04 cents 

HO - July $1.4311, up 54 points


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Crude market posted an inside trading day after a force majeure declaration in Nigeria

June 12, 2017

Recap:  The crude market posted an inside trading day after retracing some of its previous losses on news of a force majeure declaration in Nigeria prompted some buying.  The market held support at its previous low of $45.20 as it posted a low of $45.27 on Friday and rose to Thursday’s high of $46.18 following the news that Shell Development Co of Nigeria declared force majeure on Nigerian Bonny Light crude due to a leak on the Trans Niger Pipeline.  The WTI market, which failed to find further upside momentum, retraced some of its gains and settled up 19 cents at $45.83 ahead of the weekend.  The Brent market settled up 29 cents at $48.15.  The Dec 17-Dec 18 WTI spread remained pressured and traded down to -$1.16 before settling at -$0.99.  Meanwhile, the heating oil market settled up 89 points at $1.4312 and the RBOB market settled up 98 points at $1.5017.

Fundamental News Baker Hughes reported that US energy firms added oil rigs for a record 21st consecutive week.  Drillers added 8 oil rigs in the week ending June 9th, bringing the total count up to 741, the most since April 2015. 

Oil Movements reported that OPEC’s shipments are expected to fall by 180,000 bpd to 24.34 million bpd in the four weeks ending June 24th, compared with the four week period ending May 27th. 

Oil production from Nigeria and Libya, both OPEC members exempt from the output cut agreement, is threatening to flood the Atlantic Basin.  Nigeria has more than 60 million barrels of unsold crude while Libya is producing nearly triple the amount of crude this year compared with last year.  According to Energy Aspects, Nigeria and Libya have added 600,000 bpd of oil production.  Royal Dutch Shell lifted the force majeure on Nigeria’s Forcados crude this week, bringing the country’s oil exports fully online for the first time in 16 months and adding an additional 250,000 bpd to the world markets.  Libya’s oil production reached its highest level since October 2014 at 835,000 bpd this month. 

Libya’s National Oil Corp said the country’s Sharara oil field was reopened after a workers’ protest and should return to normal production within three days.  Sharara was producing nearly 270,000 bpd before employees went on strike on Wednesday over a lack of medical treatment for a colleague.

The Nigerian subsidiary of Royal Dutch Shell, SPDC, declared force majeure on exports of Nigeria’s Bonny Light crude on Thursday following a leak on the Trans Niger Pipeline. 

Morgan Stanley reported that seaborne oil exports in May increased by 2.2 million bpd on the month, with most of it due to exports from Libya, Nigeria and Iran. 

The Norwegian Oil and Gas Association reported that five Norwegian oil and gas fields will shut down production unless a wage deal is agreed with the Lederne trade union.  The shutdown would affect fields operated by Statoil, Shell and Eni and would cut output by 443,500 bpd of oil equivalent.  The deadline for talks is midnight Friday but the shutdowns would start on Sunday. 

Iran’s oil exports to the West increased in May to the highest level since the lifting of sanctions in early 2016 and almost caught up with volumes exported to Asia.  Iran has been increasing its output since 2016 to recoup market share lost to Saudi Arabia and Iraq.  Last month, Iran exported about 1.1 million bpd of crude to Europe, including Turkey, below the 1.2 million bpd supplied to Asia.  Iran’s overall May oil production totaled 3.9 million bpd.

IIR reported that US oil refiners are expected to shut in 438,000 bpd of capacity in the week ending June 9th, cutting available refining capacity by 68,000 bpd from the previous week. 


Early Market Call - as of 9:00 AM EDT

WTI - July $46.46, up 63 cents

RBOB - July $1.5083, up 64 cents

HO - July $1.4465, up 1.53 cents


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Oil market traded lower after Wednesday's DOE report which indicated a large build in crude stocks

June 09, 2017

Recap:  The oil market continued to sell off for the second consecutive session following Wednesday’s sharp decline on concerns over supply.  The market traded lower following Wednesday’s DOE report showing a larger than expected build in crude stocks and reports that Royal Dutch Shell lifted force majeure on exports of Nigeria’s Forcados crude.  The market traded mostly sideways overnight before further selling pushed the market to a low of $45.20.  It later bounced off that level and traded back towards the high posted early in the morning of $46.18 and settled in a sideways trading pattern ahead of the close.  The July WTI contract settled down 8 cents or 0.17% at $45.64 while the August Brent contract settled down 20 cents or 0.42% at $47.86.  The Dec17-Dec18 WTI spread continued its sharp sell-off on Thursday, as it settled at -$1.04, down from -$.50 on Wednesday.  Meanwhile, the product markets ended the session in positive territory, with the heating oil market settling up 61 points at $1.4223 and the RBOB market settling up 6 points at $1.4919. 

Fundamental News:  Genscape reported that oil inventories in Cushing, Oklahoma in the week ending Tuesday, June 6th fell by 1.6 million barrels on the week and by 1.4 million barrels from Friday, June 2nd to 64.9 million barrels.

Libya’s oil production has declined to 618,000 bpd following the closure at the Sharara oil field due to a protest by workers.  The field was pumping 250,000 bpd before it was shut down.   

Saudi Arabia’s King Abdullah Port on the Red Sea coast banned vessels sailing to or from Qatar from berthing at its facilities. 

Qatar’s Foreign Minister, Sheikh Mohammed bin Abdulrahman al-Thani, said Qatar is not ready to change its foreign policy to resolve a dispute with fellow Gulf Arab states and will never compromise.  While the foreign minister said Qatar had not yet been presented with a list of demands by countries which cut off ties with Qatar, he insisted it be solved by peaceful means.   

Statoil’s chief economist, Eirik Waerness, said OPEC and non-OPEC producers that agreed to cut their production will probably need to extend the cuts again to draw down crude stocks.  He said the key will be US shale output.  US shale producers added rigs for a 20th consecutive week, the longest streak in at least three decades. 

Societe Generale stated that OPEC will extend its production cuts in November and May 2018.  It said it will maintain its current targets through 2018, holding production at 32 million bpd.   

UBS cut its 2017 oil price forecast by $4/barrel and both its 2018 and 2019 price by $5/barrel.  It sees 2017 average Brent price forecast at $56/barrel from a previous estimate of $60/barrel, 2018 at $60/barrel and 2019 at $65/barrel.  It forecast WTI prices to average $53/barrel in 2017, down from a previous estimate of $57.50/barrel and $57/barrel in 2018 from a previous estimate of $63/barrel. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp hub in the week ending June 8th fell by 8.04% on the week and by 12.98% on the year to 892,000 tons.  Gasoil stocks fell by 0.52% on the week and by 14.76% on the year to 2.697 million tons while fuel oil stocks fell by 26.99% on the week and by 46.87% on the year to 568,000 tons. 

Colonial Pipeline Co is allocating space for Cycle 34 shipments on Line 20, which carries distillates form Atlanta, Georgia to Nashville, Tennessee.  It is also allocating space for Cycle 34 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.


Early Market Call - as of 9:00 AM EDT

WTI - July $45.66, up 3 cents

RBOB - July $1.4963, up 40 points

HO - July $1.4299, up 74 points


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Oil prices fell after DOE inventory report indicated unexpected build in crude stocks

June 08, 2017

Recap:  The oil market opened 21 cents lower on Wednesday as it retraced some of Tuesday’s late gains.  It posted a high of $48.23 and settled in a sideways trading range ahead of the release of the DOE’s weekly petroleum stock report.  The market later tumbled more than $2 to $45.92 in light of the inventory report showing an unexpected build in crude stocks of close to 3.3 million barrels on the week, breaking a two-month streak of declining inventories.  The crude market later retraced some of its losses in afternoon trading before it breached its earlier low and sold off to a low of $45.65 ahead of the close.  The July WTI contract settled down $2.47 or 5.1% at $45.72, the lowest settlement since May 4th.  The August Brent contract settled down $2.06 or 4.11% at $48.06.  The product markets also sold off sharply on the larger than expected builds reported in heating oil stocks of over 4.3 million barrels and 3.3 million barrels in gasoline stocks.  The heating oil market settled down 5 cents at $1.4162 while the RBOB market settled down 6.32 cents at $1.4913.

Fundamental News Platts reported that OPEC’s oil production in May increased by 270,000 bpd to 32.12 million bpd, driven by output recoveries in Libya and Nigeria, both of which are exempt from the organization’s production cuts.  OPEC’s total output was about 350,000 bpd above its stated ceiling of 32.5 million bpd. 

According to Reuters, exports of Qatari crude have not been impacted by a port ban imposed by other Gulf countries as tankers are loading Qatari crude along with cargoes from the UAE.  Two Very Large Crude Carriers, which can each carry up to 2 million barrels of oil, loaded Abu Dhabi crude grades on Wednesday, despite having taken on Qatari crude in an earlier leg of the voyage.  The loadings come amid Abu Dhabi’s easing of restrictions on oil cargoes going to or coming from Qatar. 

Citing a government official, Saudi-owned Al Arabiya television reported that the UAE wants to change Qatar’s policies, not its regime.  Meanwhile, the UAE said more moves against Qatar, including further curbs on business, remain on the table in a dispute with its neighboring countries, warning against allowing Iran to exploit the unprecedented rift.  UAE Minister of State for Foreign Affairs, Anwar Gargash, said it would be very complex to disentangle the business ties between Qatar and its neighbors but suggested this may be necessary.  He also stated that Arab states could impose an embargo on Qatar if it does not change course regarding its support of extremism and destructive policies in the region.  Qatar is talking to Iran and Turkey about securing food and water supplies to stave off possible shortages after its largest suppliers, the UAE and Saudi Arabia, cut trade and diplomatic ties.  Separately, Saudi Arabia’s Foreign Minister, Adel al-Jubeir, said Gulf states could resolve the dispute with Qatar amongst themselves without outside help.  He said he believed the issue could be dealt with among the states of the Gulf Cooperation Council.        

Royal Dutch Shell said its operations are not experiencing any operational disruptions in Qatar in the wake of a decision by several Gulf countries to sever ties. 

Separately, Royal Dutch Shell lifted a force majeure on exports of Nigeria’s Forcados crude oil on Tuesday afternoon.  The crude grade has been under force majeure since February 21, 2016 following a militant attack on the main export route. 

Libya’s National Oil Corp said that Libya’s current oil production is about 835,000 bpd and its target output is 1.25 million bpd before year end.  Libya’s oil production is facing problems from power shortages and pipeline leaks.  It also stated that foreign companies are responding positively to the special interim arrangements to allow them to continue working while security improves. 


Early Market Call - as of 9:00 AM EDT

WTI - July  $45.33, down 39 cents

RBOB - July $1.4826, up 12 points

HO - July $1.4154, down 4 points


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