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Market Intel Archives

Oil prices traded close to unchanged

October 18, 2017

Recap: Oil prices traded on both sides of unchanged, as traders sorted through tensions between Iran and the U.S; fighting between Iraqi and Kurdish forces, and expectations of higher U.S. production and exports. November WTI briefly traded above $52 a barrel, while December Brent briefly recaptured $58 a barrel. Caught between the array of news, prices finished close to unchanged. November WTI tacked on 1 cent, or 0.02%, to settle at $51.88 a barrel. December Brent finished up 6 cents, or 0.1%, to settle at $57.88 a barrel. 

November RBOB added 0.8%, to $1.63 a gallon and November heating oil ended at $1.81 a gallon, down 0.2%.

Fundamental News:  Bloomberg reported that crude oil stocks held in Cushing, Oklahoma is expected to have increased by 1 million barrels to 64.8 million barrels in the week ending October 13th.

Oil production from northern Iraq has declined due to the conflict between the Baghdad government and the Kurdish Regional Government in Erbil.  About 275,000 bpd of production has been halted and exports have declined by about 90,000 bpd.  However, this could be a temporary halt.  How much this impacts exports of crude from the region in the coming days will depend on how the three governments involved in that oil flow respond.  The only route to export oil produced in northern Iraq is through the Kurdish-controlled pipeline to the Turkish border and then to the Ceyhan on Turkey’s Mediterranean coast.  Meanwhile the president of the Kurdistan Regional Government was expected to make a statement on Tuesday evening urging the Kurdish factions to avoid civil war.

Iraq’s Prime Minister, Haider al-Abadi, called for talks under the constitution to resolve the Kurdish crisis.  Meanwhile, Iraqi Kurdistan Region President Barzani pledged to preserve the achievements of the Kurds despite the Kirkuk setback.  He said the independence vote will not be lost in vain. 

The US military said it received mixed accounts of the death toll in a clash on Monday between Iraqi and Kurdistan forces, with between three and 11 fighters killed.  A spokesman for the US-led coalition fighting Islamic State said he had no information about Islamic Revolutionary Guards Corps units in and around the Iraqi city of Kirkuk despite reports from Iraqi Kurdistan. 

The IEA’s Executive Director, Fatih Birol, said the conflict between Iraq and KRG will not have a major impact on markets for the time being. 

A senior Iranian official said US President Donald Trump’s revised hardline policy towards Iran will have little impact on Iran’s ambition to develop its vital oil sector and attract foreign investment.  Iran’s Deputy Oil Minister for Trade and International Affairs, Amir Zamaninia, said Iran hopes to sign 10 new deals with foreign companies to develop new oil and gas fields by March 2018.  Iran is negotiating 28 contracts with foreign companies, including many of Europe’s top oil companies, under a new development contract.  Iran aims to raise its oil production capacity to 4.7 million bpd by 2021 from the current 3.8 million bpd. 

JBC Energy said Europe’s diesel demand could fall by 10,000 to 20,000 bpd next year on the continuing decline in sales of diesel and the flattening out of trucking activity. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov $52.24, up 36 cents

RBOB - Nov $1.6441, up 1.38 cents

HO - Nov $1.8177, up 81 points


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Oil prices jumped to their highest level in 3 weeks

October 17, 2017

Recap: Oil prices jumped to their highest level in 3 weeks, as tensions in the Mid East heated up after Iraqi troops engaged in clashes with Kurdish armed forces near the Kirkuk oil field. November WTI sprang over $52 a barrel, while December Brent rose above $58 a barrel. Losses were trimmed, with November WTI settling at $51.87 a barrel, up 42 cents, or 0.82%, while December Brent tacked on 65 cents, or 1.14%, to finish at $57.82 a barrel. 

November heating oil added 0.9% to $1.813 a gallon, while November RBOB fell 0.3% to $1.617 a gallon.

Fundamental News: Wood Mackenzie said signs of peak oil demand are already surfacing as the world’s demand for fuels like gasoline flatlines from 2030.  It warned that transportation fuel demand, which currently accounts for nearly two of every three of the 96 million bpd of oil consumed worldwide, will start to flatline by 2030, as fuel efficiency and electric cars cut into consumption.  It estimated that while there are 2-3 million electric vehicles on the road today, that figure will increase to about 115 million by 2035. 

OPEC’s Secretary General, Mohammad Barkindo, said oil demand will grow at a healthy pace over the next five years as renewables show the fastest expansion of any type of energy.  Crude demand is expected to increase by an average of 1.2 million bpd through 2022 and slow to 300,000 bpd in 2035 to 2040. 

Iraq’s central government forces launched an advance early on Monday into territory held by Kurds, seizing part of the countryside surrounding Kirkuk in a military response to a Kurdish independence referendum last month.  The government said its troops had captured the Kirkuk airport, advanced to the city’s gates and taken control of northern Iraq’s oil company from the security forces of the autonomous Kurdish region, known as Peshmerga.  Baghdad described the advance as largely unopposed, and called on the Peshmerga to cooperate in keeping the peace.  A senior Iraqi oil official said Iraqi forces regained control of all Kikruk fields and quickly resumed production.  However, the Peshmerga said Baghdad would be made to pay a heavy price for triggering war on the Kurdistan people.  Prime Minister, Haidar Abadi ordered security forces to impose security in Kirkuk in cooperation with the population of the city and the Peshmerga.  The US called for calm on both sides, seeking to avert an all-out conflict between Baghdad and the Kurds.     

The Minister of Natural Resources for Iraq’s Kurdistan, Ashti Hawrami, ordered the resumption of full production from the Bai Hassan and Avana oilfields after a brief interruption on Monday. 

Trading sources and an official at the Iraqi Oil Ministry said Erbil had stopped works at the two fields, resulting in an immediate production loss of 350,000 bpd. 

The EIA reported that US shale production for November is expected to increase by 82,000 bpd to 6.12 million bpd.  It reported that Bakken output is set to increase by 7,600 bpd to 1.1 million bpd, while Eagle Ford output is set to increase by 2,500 bpd to 1.2 million bpd.  Permian production is expected to increase by 50,000 bpd to 2.7 million bpd.  Meanwhile, US natural gas production was projected to increase to a record 60.9 billion cubic feet/day in November.   

IIR reported that US oil refiners are expected to shut in 1.395 million bpd of capacity in the week ending October 20th, increasing available capacity by 665,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.343 million bpd in the week ending October 27th. 

Early Market Call - as of 10:23 AM EDT

WTI - Nov  $51.97 up 10 cents

RBOB - Nov $1.6357 up 1.88 cents

HO -Nov $1.8223 up 94 cents


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Oil prices increased on Friday due to a rise in Chinese oil imports and geopolitical strife in the Mid-East

October 16, 2017

Recap: Oil prices moved higher on Friday, boosted by a rise in Chinese oil imports and geopolitical strife in the Mid-East. Chinese imports rose by approximately 1 million barrels per day in September, according to data released on Friday. This, plus rising tensions between the Iraqi government and Kurdish leaders, gave rise to oil prices overnight. November WTI settled at $51.45 a barrel, up 85 cents, or 1.68%, while December Brent tacked on 92 cents, or 1.64%, to settle at $57.17 a barrel. This was the highest settlement for oil prices in 2 weeks.

November heating oil settled at $1.7970 a gallon, up 3.15, or 1.88%, while November RBOB finished up 3.90, or 2.4%, to settle at $1.622s a gallon.

Fundamental News: US President Donald Trump will not certify that Iran is complying with the nuclear agreement in a major reversal of US policy.  He said he will cancel the nuclear agreement without action from Congress or the US’ allies.  He will attempt to persuade the US Congress to approve some separate measures to toughen US policy toward Iran.  President Trump announced that he will give the US Treasury Department broad authority to impose economic sanctions against people and entities in the Iranian military.  His decision will set in motion a 60-day countdown for the US Congress to decide whether to reimpose US economic sanctions on Iran that were suspended under the agreement. 

Two Republican US Senators, Bob Corker and Tom Cotton, announced legislation they said would address flaws in the nuclear deal with Iran on Friday. 

The leaders of France, Britain Germany warned the US against taking decisions that could harm the Iran nuclear deal such as re-imposing sanctions after President Donald Trump’s decision not to certify the agreement.  They said they shared the US’ concern over Iran’s ballistic missile program and regional activities and were ready to work with Washington to address those concerns.  

Iran’s Parliament Speaker, Ali Larijani, said that if the US leaves the Iran nuclear agreement, this will be the end of the international agreement.  Iran’s Foreign Ministry spokesman, Bahram Qasemi, said Iran will strongly respond to any action against its military forces, including the Revolutionary Guards Corp.  He accused the US of violating the spirit of the nuclear agreement reached between Iran and six major powers. 

Meanwhile, the Kremlin said that if the US withdraws from the Iran nuclear deal, this will have extremely negative consequences, and Iran is likely to quit the agreement as well.  President Vladimir Putin’s spokesman, Dmitry Peskov, said Russia would continue its policy to ensure the non-proliferation of nuclear weapons.  Russia’s Foreign Minister, Sergei Lavrov, told his Iranian counterpart, Mohammad Javad Zarif, that Russia remains fully committed to the Iran nuclear deal. 

Baker Hughes reported that the number of rigs searching for oil in the US fell by 5 to 743 in the week ending October 13th. 

IIR reported that US oil refiners are expected to shut in 1.975 million bpd of capacity in the week ending October 13th, cutting available refining capacity by 371,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.356 million bpd in the week ending October 20th and to 1.343 million bpd in the following week.

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $52.20, up 75 cents

RBOB - Nov $1.6397, up 1.72 cents

HO -Nov $1.8262, up 2.95 cents


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EIA reported a 2.7 million barrel draw in U.S. inventories

October 13, 2017

Recap:  Oil prices, which experienced a late session sell-off on Wednesday, continued to slip in early trading on Thursday. November WTI fell as much as 2%, reaching a low of $50.21, while Brent touched a low of $55.89, down 1.8% from yesterday’s settlement. These early losses were pared after the EIA reported a 2.7 million barrel draw in U.S. inventories. WTI recaptured 1.4% of the day’s losses, while Brent erased 1.2% of the day’s losses. However, in a kneejerk reaction, the price recovery was stymied by statements from PIRA founder, Gary Ross, stating that “the global surplus was largely absorbed.” Prices fell to new daily lows. Prior to the close, losses were pared, with November WTI settling at $50.60 a barrel, down 70 cents, or 1.36%. December Brent lost 69 cents, or 1.21%, to settle at $56.25 a barrel.

November RBOB lost 2.6 cents, or 1.6%, to $1.583 a gallon and November heating oil settled at $1.766 a gallon, down 2.1 cents, or 1.2%. 

Fundamental News: The IEA reported that global supply and demand for crude oil will be largely balanced next year, as growth in demand helps erode an oversupply of fuel and should mostly offset an increase in output.  It continues to see global demand for crude growing by 1.6 million bpd in 2017, before moderating to 1.4 million bpd in 2018.  The IEA said commercial oil stocks likely fell in the third quarter of the year, only the second draw since the crude price crashed in 2014, due to a decline in the amount of oil held in floating storage or in transit.  Commercial stocks in industrialized countries fell in August by 14.2 million barrels to 3.015 million barrels, leaving a surplus of 170 million barrels above the five-year average.  However, the IEA said its numbers implied an increase could take place in the first quarter of next year, meaning OPEC and its partners cannot afford to slip in adherence to their supply cut agreement.  OPEC produced 32.65 million bpd in September, down 400,000 bpd on the year.  The IEA expects demand for OPEC’s crude to increase to 32.98 million bpd in the fourth quarter of the year, above September’s output and then to fall to 31.87 million bpd in the first three months of 2018.  It sees non-OPEC crude supply rising by 700,000 bpd in 2017 and by 1.5 million bpd in 2018 to reach 59.6 million bpd.  It reported that US crude production is expected to grow by 470,000 bpd in 2017 and by 1.1 million bpd in 2018. 

The IEA’s Executive Director, Fatih Birol, said oil supplies are still exceeding demand despite OPEC’s agreement with Russia and other major producers to cut output.               

The founder of PIRA Energy, Gary Ross, said OPEC will likely extend cuts at their March meeting through September.  He also stated that OPEC is unlikely to increase production by 1 million bpd again unless prices rally.  He said that the global crude surplus that caused a price decline has largely been absorbed, resulting in higher crude prices.  He added that Brent crude could make a new short-term high, perhaps above $60/barrel by year end and will rise to $70/barrel within the next five years.  The discount for WTI versus Brent is likely to decline as the market rebalances. 

The US Department of the Interior’s Bureau of Safety and Environmental Enforcement said about 20% or 344,000 bpd of US Gulf of Mexico oil production is offline in the aftermath of Hurricane Nate. 

US customers of Saudi Arabian crude are set to receive 30-35% below the volumes they nominated for November loading.  The cuts are likely to keep Saudi oil imports into the US in the range of 600,000-700,000 bpd for the next several months. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.57, up 97 cents

RBOB - Nov $1.6234, up 4.03 cents 

HO -Nov $1.8008, up 3.55 cents


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Oil prices gained after OPEC raised Q1 2018 demand forecasts

October 12, 2017

Recap: Oil prices edged higher on Wednesday, despite Saudi Arabia reportedly pumping 9.97 million barrels per day of crude, which was up 22,000 barrels in August. Prices gained after OPEC raised Q1 2018 demand forecasts and after Barclay’s stated that excess inventories are showing signs of draining and in turn, will have a bullish impact on forward prices. November WTI settled at $51.30 a barrel, up 38 cents, or 0.75%, while December Brent finished at $56.94, up 33 cents, or 0.58%.

As a result of the aforementioned news, contango market conditions have been narrowing. The discount in the Dec17/Dec18 WTI spread has narrowed 98% since the beginning of September, and finished the session at 5 cents premium to the Dec18.  

November RBOB rose 1.1%, to $1.609 a gallon, while November heating oil gained 1.2% to $1.786 a gallon.

Fundamental News:  The Bureau of Safety and Environmental Enforcement said about 32.7% or 571,854 bpd of current production remains shut in due to Hurricane Nate. 

According to the EIA’s Winter Fuels Outlook, the average household expenditures for all major home heating fuels is expected to increase this winter due to expected colder weather and higher energy costs.  The cost of heating with home heating oil is expected to increase by 17%.  Most of the increase reflects expected colder weather rather than higher energy costs.  In its Short Term Energy Outlook, the EIA said total world petroleum demand in 2017 is expected to increase by 1.35 million bpd to 98.31 million bpd and increase by 1.58 million bpd to 99.89 million bpd in 2018.  OPEC’s oil production is estimated to fall by 180,000 bpd to 32.5 million bpd in 2017 but increase by 490,000 bpd to 32.99 million bpd.  Meanwhile, US petroleum demand is expected to increase by 230,000 bpd to 19.92 million bpd in 2017 and by 420,000 bpd to 20.34 million bpd in 2018.  Gasoline demand is forecast to remain unchanged at 9.32 million bpd in 2017 and increase by 40,000 bpd to 9.36 million bpd in 2018.  Distillate demand is forecast to increase by 70,000 bpd to 3.95 million bpd in 2017 and by 90,000 bpd to 4.04 million bpd in 2018.  US oil production is expected to increase by 380,000 bpd to 9.24 million bpd in 2017 and by 680,000 bpd to 9.92 million bpd in 2018.  In regards to prices, the EIA forecast Brent spot prices to average $52/barrel in 2017 and $54/barrel in 2018, up $1/barrel in 2017 and $2/barrel in 2018, compared with last month’s forecast.  WTI prices are forecast to be $3.50/barrel lower than Brent prices in 2018. 

OPEC’s Secretary General, Mohammed Barkindo, called on US shale producers to help curtail global oil supply, warning that extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term. 

In its monthly report, OPEC said the market could find support in the winter from low distillate fuel stocks and forecasts for colder weather.  OPEC estimated that world oil demand growth in 2017 is expected to increase by 1.5 million bpd after an upward revision of about 30,000 bpd from the previous estimate. Demand for OPEC crude in 2017 is estimated to stand at 32.8 million bpd, up 600,000 bpd on the year.  OPEC said the world would need 33.06 million bpd of its crude next year, up 230,000 bpd from its previous forecast.  It is the third consecutive monthly increase in the projection from its first estimate made in July.  OPEC stated that it produced 32.75 million bpd in September, up from 89,000 bpd from August.  It complied 98% with the cutback pledge, up from 83% initially reported in August.  Should OPEC keep producing at similar levels to September, the market could move into a deficit next year.  OPEC expects oil prices to remain between $50-$55/barrel in the next year. 

Saudi Arabia cut its crude supplies to its largest customers in Asia. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov $50.35, down 95 cents

RBOB - Nov $1.5905, down 1.89 cents

HO - Nov $1.7508, down 3.56 cents


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Oil prices after Saudi oil minister stated that Saudi Arabia plans to cut November exports

October 11, 2017

Recap: Oil prices gained on Tuesday after the Saudi oil minister stated that his country plans to cut its November exports by 560,000 barrels per day. This, combined with 58.5% of production in the Gulf of Mexico still remaining off line after Hurricane Nate, pushed spot WTI back above $50 a barrel and December Brent back above $56 a barrel. November WTI finished the session at $50.92, up $1.34, or 2.7%. December Brent tacked on 82 cents, or 1.47%.

November RBOB rose 3.2 cents, or 2.1%, to $1.592 a gallon and November heating oil added 3 cents, or 1.7%, to $1.765 a gallon. 

Fundamental News: Bloomberg reported that crude stocks held in Cushing, Oklahoma increased by 1.8 million barrels in the week ending October 6th to 64.3 million barrels. 

The Bureau of Safety and Environmental Enforcement stated that about 58.5% or 1.02 million bpd of current oil production in the US Gulf of Mexico remains shut in due to Hurricane Nate. 

OPEC’s Secretary General, Mohammed Barkindo, said OPEC will reconvene a meeting with the US for a deal to cut oil output.  He said OPEC and the US agree they need to work together to ensure stability in oil markets.  He said a meeting with US independent oil firms as well as hedge funds could take place later this year or early in the next one.  He also stated that US shale producers should share responsibility in sustaining the rebalance of the oil market over the medium- and long-term.  OPEC’s Secretary General said that global oil demand in 2018 is expected to increase to 1.54 million bpd from 1.5 million bpd in 2017.    

Saudi Arabia cut its crude oil allocations for November by 560,000 bpd, in line with the country’s commitment to an OPEC-led output cut agreement.  It plans to ship 7.15 million bpd next month, up from low levels during the summer when domestic demand was at its peak.  It curtailed its exports at 6.6 million bpd in August.    

Russia’s Prime Minister, Dmitry Medvedev, said the output cut agreement reached between OPEC and non-OPEC producers is working as it keeps oil prices within a reasonable range.  He also stated that talks on other countries joining the global oil output cut deal were under way.

Lukoil’s Chief Executive, Vagit Alekperov, said oil producers should not extend supply cuts beyond their expiry at the end of March if prices increase to $60/barrel.  He said Russia and OPEC should wind down their deal from April if prices reach that level and added that they should not allow the market to move into a supply deficit. 

Macquarie sees OPEC extending output cuts through at least the third quarter of 2018. 

The head of Vitol, Ian Taylor, said that US oil output could be set for a last increase in 2018 before growth flattens for a number of years as rising costs make some production uneconomic.  Vitol expects US output to increase by 500,000 to 600,000 bpd next year but the increase would cause cost inflation and make some production loss-making.  He said the anticipated decline in US output combined with increased growth in global demand for oil should push prices above the current range of $50-$60/barrel.  However, in the short and medium term, the oil market will remain rangebound with prices possibly coming under downward pressure in the first few months of 2018, when demand would typically weaken. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.10, up 17 cents

RBOB - Nov $1.6090, up 1.74 cents

HO -Nov $1.7800, up 1.47 cents


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Oil prices closed higher on indications that OPEC may extend production cuts

October 10, 2017

Recap: Oil prices moved higher on Monday, in what was a quiet trading session due to the U.S. Columbus Day Holiday. Strength came from hints by OPEC that the group may possibly extend production cuts, and from the return of oil production in the Gulf of Mexico that was shut due to Hurricane Nate. November WTI tacked on 29 cents, or 0.6%, to settle at $49.58 a barrel, while December Brent edged up 17 cents, or 0.31%, to settle at $55.79 a barrel.

November RBOB gained 0.06 cent to $1.5594 a gallon, while November heating oil fell 0.5% to $1.7352 a gallon.

Fundamental News: The US Department of the Interior’s Bureau of Safety and Environmental Enforcement said about 85% or 1.49 million bpd of US Gulf of Mexico oil production is offline in the aftermath of Hurricane Nate. 

Oil ports and some refineries in Louisiana, Mississippi and Alabama were assessing their facilities on Sunday to decide when they could reopen after Hurricane Nate made landfall on Saturday night near the mouth of the Mississippi River.  As of Sunday morning, the port of New Orleans in Louisiana remained closed to inbound and outbound vessel traffic.  On Monday, the US Coast Guard said that the port of Mobile, Alabama resumed normal operations after it was closed due to the storm.  Meanwhile, Chevron Corp started to redeploy personnel and restore oil production at its Gulf of Mexico facilities following storm Nate.  Separately, BHP Billiton started mobilizing staff to its Neptune and Shenzi platforms at the Gulf of Mexico after Hurricane Nate, expecting to make progress on resuming output over the next 24 hours.

OPEC’s Secretary General, Mohammad Barkindo, said the oil market is rebalancing fast and has almost entirely depleted the oversupply of refined products as OPEC complies with its output cut agreement.  He said growth in US shale oil output had slowed compared with the first half of 2017 and growth in global demand may show further upward revisions. 

Saudi Arabia has cut crude oil allocations for November by 560,000 bpd to 7.15 million bpd, as the top oil exporter makes good on its pledge to help rein in a global supply glut.  The country curtailed its exports in September to below 6.7 million bpd despite high customer demand.   

Libya’s Sharara oil field output is expected to increase to 250,000 bpd.  Its production has been rising since it reopened on October 4th. 

Bank of America Merrill Lynch said the recent rally in oil prices has enabled an increase in producer hedging, reducing the price sensitivity of US output in 2018.  It sees US shale output expanding by 470,000 bpd this year and 690,000 bpd in 2018, with sequential growth in the fourth quarter of 2017 to the fourth quarter of 2018 of 480,000 bpd.   

Goldman Sachs said there would be limited oil output impact if the US opposed the Iran deal.  It said that even if other signatories continue to support the deal, European buyers could stop purchases to avoid falling foul of US secondary sanctions. 

IIR reported that US oil refiners are expected to shut in 1,213 million bpd of capacity in the week ending October 13th, increasing available capacity by 279,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.356 million bpd in the week ending October 20th. 


Early
 Market Call - as of 9:00 AM EDT

WTI - Nov  $50.45 up 87 cents

RBOB - Nov $1.5008 up 3.14 cents

HO -Nov $1.7576 up 2.24 cents


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Tropical Storm Nate may impact refinery capacity and back up crude oil stockpiles

October 09, 2017

Recap: Oil prices fell by 4% on Friday, posting their first weekly loss in 5 weeks. Traders were focused on Tropical Storm Nate, and its potential of reaching the Gulf of Mexico. After a mixed trading session, November WTI slipped $1.50, or 2.95%, to settle at $49.29 a barrel, while December Brent settled at $55.62 a barrel, down $1.38, or 2.42%.

The possibility of Tropical Storm Nate affecting refinery operations in the Gulf of Mexico is seen as impacting refinery capacity, while at the same time backing up crude oil stockpiles. This should give rise to product prices, while pressuring crude oil.

Although post Hurricane Harvey refinery operations have returned to near normal conditions, it appears that U.S. refiners are grappling with strong demand for distillates. For the week ending September 30th, total distillate stocks fell 2.6 million barrels to 135.4 million barrels. This is 25 million barrels below the level at the start of 2017, and 4% below the 5-year average.

Fundamental News: Oil and gas producers were preparing for the second storm in as many months to impact the US Gulf Coast as Tropical Storm Nate threatened to develop into a hurricane.  The tropical storm is expected to strike the US Gulf Coast by early Sunday.  ConocoPhillips began evacuating non-essential personnel from its Magnolia oil platform in the central Gulf of Mexico, joining six other producers that have withdrawn workers or cut production.  The US Department of the Interior’s Bureau of Safety and Environmental Enforcement said about 1.24 million bpd or 71% of US Gulf of Mexico oil production is offline ahead of Tropical Storm Nate.   

Oil Movements reported that OPEC shipments are expected to fall by 150,000 bpd to 21.71 million bpd in the four week period ending October 21st, compared with the previous four week period ending September 23rd.  Middle East shipments, including from non-OPEC countries Oman and Yemen, are expected to fall by 150,000 bpd to 17.06 million bpd. 

Baker Hughes reported that the worldwide rig count for September was 2,081, down 35 from 2,116 in August.  The US rig count for September was 940, down 7 from 947 in August.  Baker Hughes reported that the number of rigs searching for oil in the week ending October 6th fell by 2 to 748. 

The Kremlin said that Russian President, Vladimir Putin, did not propose extending the OPEC and non-OPEC output cut deal but said he recognized it was a possibility. 

BMI Research raised its 2018 Brent crude price forecast to $57/barrel from a previous estimate of $55/barrel, as a deficit is expected to emerge.  It also raised its 2020 outlook to $73/barrel from a previous forecast of $70/barrel. 

According to Morningstar, US Gulf Coast crude storage capacity will increase by 56 million barrels in 2018 and beyond amid record US oil exports. 

Energy Aspects reported that global crude stocks are forecast to fall by 100,000 bpd in 2018.  It said strong demand and a more muted supply response from US shale will ensure stock builds will be limited. 

Bloomberg reported that global refinery outages reached 4.56 million bpd in the week ending October 5th, down from 4.85 million bpd in the previous week. 

IIR reported that US oil refiners are estimated to have shut in 1.342 million bpd of capacity in the week ending October 6th, increasing available refining capacity by 508,000 bpd from the previous week. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $49.68, up 39 cents

RBOB - Nov $1.5524, down 68 points

HO -Nov $1.7388, down 50 point


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Tropical Storm Nate may cause product disruptions in the Gulf of Mexico

October 06, 2017

Recap:  The losing streak in oil prices came to a halt after the Saudi and Russian oil ministers stated that their countries would support extending output cuts through 2018 and concern regarding possible production disruptions, as a possible hurricane closes in on the Gulf of Mexico. The original agreement was set to end March of 2018. Prices have fallen 3.2% since last week on what appeared to be profit taking on the long side.

After dipping briefly below $50 a barrel, November WTI rebounded, stopping at $51.22, just above the 10-day moving average of $51.18. A lack of follow-through above this average pushed prices back down. This spot contract settled at $50.79 a barrel, up 81 cents, or 1.62%, while December Brent gained $1.20, or 1.62%, to settle at $57.00 a barrel.

November RBOB tacked on 3.1 cents, or 2%, to $1.611 a gallon and November heating oil added 1.2 cents, or 0.7%, to $1.786 a gallon.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, October 3rd increased by 144,518 barrels on the week and by 468,006 barrels from Friday, September 29th to 65,259,010 barrels.

Oil and natural gas producers began evacuating staff at US Gulf of Mexico platforms on Thursday ahead of Tropical Storm Nate.  The storm is expected to strengthen into a hurricane by the weekend and move up the center of the Gulf as it makes landfall on the Louisiana coast early on Sunday.  Chevron Corp, ExxonMobil Corp and Royal Dutch Shell and others have started withdrawing personnel from Gulf platforms.  ExxonMobil Corp is evacuating all staff from its Lena platform in the US Gulf of Mexico ahead of Tropical Storm Nate.  The Louisiana Offshore Oil Port has not suspended operations and vessel activity around it continues as normal. 

Saudi Arabia’s Energy Minister, Khalid al-Falih, said the country is open to all options for the global oil supply cut agreement, including an extension until the end of 2018.  He added that a balanced oil market, reduction of inventories to a normal level and the return of oil investments is Saudi Arabia’s aim.  He said the country is committed to oil production cuts and encourages other oil producers to follow the global oil output cut deal.  Separately, Saudi Arabia said world energy markets can handle supplies of US shale oil next year as demand is rising and deals between Russia and Saudi Arabia have helped stabilize crude prices. 

Russia’s Energy Minister, Alexander Novak, said the country would support the possible participation of additional countries in the output deal and that he was satisfied with current oil prices. 

Senior Saudi officials said a plan to list Saudi Aramco in 2018 is on track, as Saudi Arabia is set to sign investment agreements with Russia.  Saudi Arabia’s Energy Minister, who is also Aramco’s chairman said the IPO would happen in the second half of 2018, adding that the listing would be used as a catalyst for the opening up of the Saudi economy. 

Libya’s Sharara oil field output is currently up to 200,000 bpd. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending October 5th fell by 6.08% on the week and by 26.69% on the year to 788,000 tons.  Gasoil stocks fell by 2.19% on the week and by 15.65% on the year to 2.549 million tons while fuel oil stocks increased by 7.83% on the week and by 65.99% on the year to 1.391 million tons.

 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $49.58, down $1.22

RBOB - Nov $1.5846, down 2.65 cents

HO -Nov $1.7639, down 2.25 cents


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EIA reported a 6 million barrel draw in U.S. crude oil stocks

October 05, 2017

Recap: Oil futures fell for the third straight session, wiping out earlier gains posted after the EIA report showed a 6 million barrel draw in U.S. crude oil stocks. The larger than expected draw was offset by record U.S. crude oil exports, which rose to 13.888 million barrels. This tempered belief that the global oversupply hang was dissipating.

Prices slipped to their lowest level in 2-weeks and their lowest settlement in equally as much time. December Brent fell 20 cents, or 0.36%, to settle at $55.80 a barrel. WTI for November delivery lost 44 cents, or 0.87%, settling at $49.98 a barrel. RBOB rose 1.5 cents, or 1%, to $1.581 a gallon, while November heating oil tacked on 2.3 cents, or 1.3%, to $1.774 a gallon.

Fundamental News: BP has started evacuating non-essential workers from the Thunder Horse and Na Kika platforms and the West Vela drilling rigs in deepwater Gulf of Mexico as the company monitors the development of Tropical Depression 16.  Meanwhile, Royal Dutch Shell Plc said it was minimizing staff working offshore at its eastern Gulf of Mexico assets due to forecasts that the tropical depression will move close to the region over the weekend. 

Libya’s National Oil Corp said production at the country’s Sharara oil field resumed on Wednesday after an armed brigade forced a shutdown on Sunday night.  As production resumed, the NOC lifted a force majeure on loadings of Sharara crude from the Zawiya port.  

OPEC’s Secretary General, Mohammed Barkindo, said he was confident that his organization would be able to restore sustainable stability to world oil markets.  He stated that all countries participating in an oil output cut deal between OPEC and non-OPEC producers supported the initiative and that Russia was fully complying with its own obligations. 

Russia’s Energy Minister, Alexander Novak, said energy ministers from OPEC member states and other producing countries agreed at a meeting in Russia that they are ready to extend a global deal on cutting oil output if that is necessary. 

Russia’s President Vladimir Putin said he had all grounds to believe that world oil markets will soon be balanced.  He stated that the output cut deal between OPEC and non-OPEC countries has helped stabilize markets and opens up prospects for further cooperation.  He added that Russia may agree to extend the deal with OPEC to cut supplies beyond March to the end of 2018. 

Russia’s Foreign Minister, Sergei Lavrov, said the country wants to continue working with Saudi Arabia on the implementation of an agreement to cut global oil output. 

Iran’s Oil Minister, Bijan Zanganeh, said he saw no objection within OPEC to extend or deepen the OPEC-led deal to cut oil output.  He said it was his understanding that all OPEC members want to do everything necessary to stabilize oil markets.   

Venezuela’s Oil Minister, Eulogio del Pino, said an extra 10 to 12 oil producing countries have been invited to join an OPEC-led output cut agreement.  He said the invited countries were in South America and Africa.  Meanwhile, Venezuela’s President, Nicolas Maduro, said there is a need to maintain high level compliance with the global oil output cut deal at a time when the oil market is volatile due to increased US drilling. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $50.12, up 15 cents

RBOB - Nov $ 1.6119, up 3.13 cents

HO -Nov $1.7961, up 2.23 cents


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