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Market Intel Archives

Oil market posted an inside trading day and settled in positive territory

June 07, 2017

Recap:  The oil market posted an inside trading day on Tuesday and settled in positive territory after posting losses during the two previous sessions.  While the news of the rift in the Middle East continued to circulate the market, the market remained in its recent trading range as the tension was not seen having much of an impact on oil supply.  Kuwait’s Oil Minister said Qatar remained committed to restricting crude output under the OPEC and non-OPEC output cut agreement.  The market opened unchanged at $47.40 and held its support at its previous lows as it posted a low of $46.94 in overnight trading.  It later traded to $47.74 and settled in a sideways trading pattern until some late morning buying pushed the market higher.  It rallied to a high of $48.23 in afternoon trading as traders positioned themselves ahead of the release of the weekly inventory reports, which are expected to show draws in crude stocks of 3.5 million bpd on the week.  The July WTI contract settled up 79 cents or 1.67% at $48.19, while the August Brent contract settled up 65 cents or 1.31% at $50.12.  Meanwhile, the heating oil market settled up 69 points at $1.4662 and the RBOB market settled up 1.64 cents at $1.5545.

Fundamental News Bloomberg reported that crude stocks held in Cushing, Oklahoma fell by 750,000 barrels to 64.07 million barrels in the week ending June 2nd.

In its latest Short Term Energy Outlook, the EIA cut its 2017 world oil demand growth forecast by 20,000 bpd to 1.54 million bpd and its estimate for 2018 by 10,000 bpd to 1.62 million bpd.  World oil demand in 2017 is expected to increase to 51.32 million bpd and to 52.58 million bpd in 2018.  OPEC’s oil production is estimated to fall by 230,000 bpd to 32.3 million bpd in 2017 but increase by 470,000 bpd to 32.77 million bpd in 2018.  US oil demand in 2017 is expected to grow by 320,000 bpd, up from a previous estimate of 290,000 bpd while demand in 2018 is forecast to grow by 310,000 bpd from a previous estimate of 300,000 bpd.  The EIA forecast Brent crude prices will average $53/barrel in 2017 and $56/barrel in 2018, while WTI crude prices are forecast to average $2/barrel less than Brent prices in both 2017 and 2018.  The EIA also forecast the price of regular gasoline in 2017 at $2.38/gallon.  In the 2017 summer driving season, US regular gasoline retail prices are forecast to average $2.46/gallon, compared with $2.23/gallon last summer.    

According to Hadi Djuraid, a special adviser to Indonesia’s Energy and Mineral Resources Minister, Ignasius Jonan, the country has applied to become part of OPEC once again.  Several members, including Saudi Arabia and the UAE asked it to rejoin, and OPEC has agreed to Indonesia’s requirement to be exempt from the group’s output cuts. 

Kuwait’s Oil Minister, Essam al-Marzouq, said Qatar remains committed to an oil output cut agreed upon by OPEC and non-OPEC producers last month.  Saudi Arabia, the UAE, Bahrain and Egypt severed ties with Qatar, accusing the country of supporting Islamists and Iran.  Qatar denies these charges. 

The UAE has banned all Qatari-flagged vessels and any ships travelling to and from Qatar from entering all its oil ports. 

An analyst at Citigroup said fears that there will be an oversupply of US shale is overblown.  He said that even with US production increasing at over 1 million bpd, he estimates 2018 oversupply of just 200,000 to 300,000 bpd. 

According to cFlow, S&P Global Platts trade flow software, about 1.15 million tons of distillates is expected to arrive in Europe from the US Gulf Coast in June. 

According to IHS, crude and refined product shipments from the US Gulf increased to 4.63 million metric tons on 111 ships in the week ending June 1st.  It is up 4% from the previous week’s 4.45 million metric tons on 106 ships. 


Early Market Call - as of 9:00 AM EDT

WTI - July $47.59, down 59 cents

RBOB - July $1.5267, down 2.75 cents 

HO - July $1.4539, down 1.21 cents


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Oil market erased gains after tension in Middle East is unlikely to impact oil supply

June 06, 2017

Recap: The oil market rallied higher in overnight trading due to a political rift in the Middle East. Saudi Arabia, Bahrain, the UAE and Egypt cut off most diplomatic and economic ties to Qatar on Monday, accusing the country of meddling in their internal affairs and supporting terrorism.  The market posted a high of $48.42 following the news.  However, the market erased its gains and sold off to a low of $46.86 by mid-day as traders assessed that the tension was unlikely to have an impact on oil supply.  The market later retraced some of its losses in afternoon trading and traded back towards the $47.50 level ahead of the close.  The July crude settled down 26 cents or 0.55% at $47.40 and the August Brent contract settled down 48 cents or 0.96% at $49.47.  Meanwhile, the heating oil market settled down 2.55 cents at $1.4593 and the RBOB market settled down 3.9 cents at $1.5381.

Fundamental News:  Saudi Arabia’s Energy Minister, Khalid al-Falih, said OPEC and non-OPEC producers have only just agreed to extend their crude oil production deal through to March next year but added that he will consider the need for deeper output cuts in July.  He was optimistic that the deal struck between OPEC and non-OPEC producers on May 25th would begin to start working by the end of June.  A five country monitoring committee overseeing the deal will meet in Russia over July 22-24th.  He hoped compliance to the agreement in May would be even better than April, when the committee reported 102% overall compliance.

Indonesia’s Energy Ministry officials said Indonesia sent a letter to OPEC requesting to reactivate its membership in the group as long as it can avoid output cuts.  Indonesia’s OPEC membership was suspended in December, less than a year after rejoining the cartel. 

Saudi Arabia, Bahrain, the UAE and Egypt cut off most diplomatic and economic ties to Qatar in a move designed to punish one of the region’s financial superpowers for its ties with Iran and Islamic groups in the region.  They said they will suspend air and sea travel to and from Qatar.  Saudi Arabia will also shut land crossings with its neighbor, potentially depriving Qatar of imports through its only land border. 

The National Union of Petroleum and Gas Workers of Nigeria has threatened to strike as it says the government has made a deal with oil company Oando over the Port Harcourt refinery without stakeholder involvement. 

The Trump administration is considering possible sanctions on Venezuela’s energy sector, including PDVSA, in what would be a major escalation of US efforts to pressure the country’s leftist government.  The idea of possible sanctions on its energy sector has been discussed at high levels of the administration as part of a wide-ranging review of US options, but officials said it remains under debate and action is not imminent.  Officials said the administration is moving cautiously, mindful that if such an unprecedented step is taken it could deepen the country’s economic and social crisis.   

Colonial Pipeline Co is allocating space for Cycle 33 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee. 

Bank of America Merrill Lynch said more than 50 conventional oil projects will start up over the next five years, meaning shale producers and OPEC only need to deliver combined annual growth of 900,000 bpd to satisfy demand. 

HSBC forecast Brent crude prices at $56/barrel in 2017 compared with an estimate of $59.90/barrel and $65/barrel in 2018 from a previous estimate of $75/barrel. 


Early Market Call - as of 9:00 AM EDT

WTI - July $47.12, down 28

RBOB - July $1.5244, down 1.35 cents

HO - July $1.4454, down 1.40 cents


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Oil futures fell on concerns that US's exit of Paris agreement could worsen global supply of crude oil

June 05, 2017

Recap:  Oil futures fell for the second week in a row on concern that U.S. President Trump’s decision to exit the Paris climate agreement would worsen an already overflowing global supply of crude oil. Adding pressure to Friday’s trading session was a rise in the U.S. rig count, marking the 20th straight week the count rose. Both benchmarks fell as much as 3.3% during the session, with July WTI reaching a low of $46.74 and August Brent bottoming at $48.95. However, losses were pared ahead of the weekend. July WTI settled at $47.66 a barrel, down 70 cents, or 1.45%, and August Brent fell 68 cents, or 1.34%, to settle at $49.95 a barrel.

July RBOB fell 3.4 cents, or 2.1% to $1.568 a gallon, while July heating oil slipped 2.6 cents, or 1.8%, to $1.476 a gallon. Both contracts trade sharply lower for the week.

Fundamental News:  US energy firms added oil rigs for a record 20th week in a row.  Baker Hughes reported that the number of rigs searching for oil increased by 11 in the week ending June 2nd to 733. 

According to Bloomberg, OPEC’s compliance in May remained strong, despite an increase in production of 315,000 bpd to 32.21 million bpd.  It reported that every member of the group that agreed to an extension of the cuts had a compliance ratio of more than 95% last month.  Saudi Arabia cut more than what was agreed, with a compliance rate of 101%.

The US Census Bureau reported that US crude oil exports reached 1.001 million bpd in April compared with 834,000 bpd in March.  Exports to China stood at 323,000 bpd, while exports to Canada totaled 296,000 bpd and exports to the Netherlands totaled 78,000 bpd. 

Russia’s Deputy Prime Minister, Arkady Dvorkovich, said he did not believe that the global output cut agreement would be altered if prices for the commodity fell. 

TASS news agency reported that Saudi Arabia’s Energy Minister, Khalid al-Falih, said participants in the global oil output cut deal may consider the possibility of making deeper production cuts in November.  Separately, he stated that Russia’s Rosneft and Saudi Arabia’s Saudi Aramco will look into joint investments in assets in Saudi Arabia.

Russia’s Rosneft said oil producers in the US could add up to 1.5 million bpd to world oil output next year, erasing any gains from the OPEC/non-OPEC output cut deal.  It said the output cut agreement will not stabilize the crude market over the long term as US shale fills the supply shortfall.   

Lukoil’s Chief Executive Officer, Vagit Alekperov, said the company will start reducing oil production in Iraq from June as part of a global deal to cut output.  He declined to state the details, saying the reduction would not be significant.   

Kazakhstan’s Energy Minister, Kanat Bozumbayev, said the country has secured an easing of production cut obligations it committed to last year as part of Russia and OPEC’s output cut agreement, on account of rising volumes from the Kashagan field. 

Venezuela’s Oil Minister, Nelson Martinez, said Rosneft will get 70,000 bpd of oil exports this year from Venezuela under a loan deal involving Citgo. 

IIR reported that US oil refiners are expected to shut in 350,000 bpd of capacity in the week ending June 2nd, increasing available refining capacity by 81,000 bpd from the previous week.  IIR expects offline capacity to fall to 252,000 bpd in the week ending June 9th and to 127,000 bpd in the subsequent week.


Early Market Call - as of 9:00 AM EDT

WTI - July  $47.25, down 41 cents

RBOB - July $1.5595, down 1.77 cents

HO - July $1.4692, 1.50 cents


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Oil futures continue to fall as Libyan production recovers and U.S. production climbs

June 01, 2017

Recap: Oil futures continued to weaken on Wednesday, with Brent falling back below $50 a barrel and WTI falling below $48 a barrel for the first time in 3 weeks. The persistent weakness comes in the face of OPEC-led output cuts, as Libyan production recovers and U.S. production climbs. Gains were slightly pared in both benchmarks, with July WTI settling at $48.32 a barrel, down $1.32, or 2.70%. July Brent fell $1.53, or 2.95%, to settle at $50.31 a barrel.

June RBOB fell 2.7 cents, or 1.6%, to $1.612 a gallon and June heating oil shed 3.4 cents, or 2.2%, to $1.515 a gallon.

Fundamental News:  Genscape reported that crude oil stocks in the week ending Friday, May 26th fell by 787,403 barrels on the week and by 73,420 barrels from Tuesday, May 23rd to 67,494,384 barrels. 

Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 700,000 barrels to 64.9 million barrels in the week ending May 26th. 

Saudi Arabia’s Energy Minister, Khalid al-Falih, said OPEC and non-OPEC producers are committed to bringing global oil inventories down to the industry’s five-year average.  Following a meeting with his Russian counterpart, Alexander Novak, they stated that they saw their cooperation in oil markets lasting after the current joint oil output agreement expires in March 2018.  Saudi Arabia’s Energy Minister reiterated his country’s position to do “whatever it takes” along with Russia to help stabilize the oil market, signaling an open-ended policy to reduce the inventory overhang and balance the market.  He also played down the threat of rising US shale production, stating that supplies coming from marginal barrels including shale production will not be sufficient to meet the future need for incremental capacity in the mid-term. 

Kuwait’s Oil Minister, Ali Khalifa Al-Sabah, said he expects oil prices to improve in July. 

The head of Libya’s National Oil Corp said the country’s oil production recovered to 827,000 bpd following a technical problem at the Sharara field. 

Crude inventories in the Amsterdam-Rotterdam-Antwerp region increased by 364,000 barrels in the week ending May 26th to 60.72 million barrels. 

IHS reported that crude and refined product shipments from the US Gulf increased to 4.45 million metric tons on 106 ships in the week ending May 25th. 

Bloomberg reported that preliminary US waterborne crude imports fell by 878,100 bpd to 4.5 million bpd in the week ending May 25th. 

Genscape reported that there were no crude-by-rail loadings at five monitored facilities on the US East Coast for the week ending May 19th, the first time since Genscape began monitoring the facilities in August 2013.  Volumes have been falling since reaching 145,000 bpd in the week ending April 14th. 

The EIA’s Petroleum Supply Monthly report showed that US gasoline demand fell year on year for the third consecutive month in March.  US gasoline demand in March fell by 0.5% on the year to 9.353 million bpd.  Meanwhile, distillate demand increased by 5.4% to 4.15 million bpd in March.  The EIA also reported that US shipments of crude via rail in March increased by 71,000 bpd on the month to 469,000 bpd. 


Early Market Call - as of 9:00 AM EDT

WTI - July $48.43, up 11 cents 

RBOB - July $1.5983, up 17 points

HO - July $1.5095, down 83 points


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OPEC's decision to not raise level of output cutbacks pushed oil prices lower.

May 31, 2017

Recap:  Tuesday’s trading session was choppy, as oil futures traded on both sides of unchanged, with July WTI initially recapturing the $50 level. Disappointment over OPEC’s decision not to raise the level of output cutbacks, in conjunction with the recovery of Libyan output, pushed oil prices lower. July Brent slipped to a low of $51.60 before severing losses, finishing the session at $51.84, down 45 cents, or 0.80%.  WTI for July delivery bottomed at $49.03 prior to recapturing some of its losses, to settle at $49.66, down 14 cents, or 0.28%.

June RBOB fell less than half a cent, or 0.2%, to $1.639 a gallon, while June heating oil lost 1.4 cents, or 0.9%, to $1.549 a gallon.

Fundamental News:  Russia’s President, Vladimir Putin, is scheduled to meet Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, on Monday after the oil exporters reached a deal to extend cuts for another nine months.

The head of Russia’s Rosneft, Igor Sechin, and Saudi Arabia’s Energy Minister, Khalid al-Falih, discussed cooperation during their meeting on Tuesday.  They also discussed possible ways of cooperation between Rosneft and Saudi Aramco in upstream, downstream as well as in liquefied natural gas projects and trading.  They also praised the outcome of last week’s meeting between OPEC and non-OPEC producers. 

Libya’s National Oil Corp said the country’s oil production was at 784,000 bpd due to a technical issue at the Sharara field, but was expected to start increasing to 800,000 bpd on Tuesday. 

Alberta’s provincial government said it remained steadfastly committed to seeing the Trans Mountain crude pipeline through to completion. 

Colonial Pipeline is allocating space for Cycle 32 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. 

Japan’s Ministry of Finance reported that the country’s crude imports from Iran in April increased to about 41,000 bpd from zero a year ago. 

Goldman Sachs stated that 2018/19 oil futures need to remain at or below $50/barrel to discourage further shale production increases and encourage OPEC to maintain a range bound market.  It said falling US production costs will keep supply rising for years to come.  It also said that once OPEC’s production growth resumes after its self-imposed cuts, US and OPEC output is expected to increase by 1 million bpd to 1.3 million bpd between 2018 and 2020.  It forecast 2017 and 2018 WTI crude prices at $52.92/barrel and $55/barrel, respectively.  It also forecast 2017 and 2018 Brent crude prices at $55.39/barrel and $58/barrel, respectively.

JP Morgan cut its 2018 Brent oil forecast by $10/barrel to $45/barrel.  It also cut its 2018 WTI forecast by $11/barrel to $42/barrel.  It said the oil market will need to accommodate a substantial build in inventories next year which will weigh on prices.   

According to Bloomberg, total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle increased by 2.3% to 849,570 bpd in the week ending May 25th. 

IIR reported US oil refiners are expected to shut in 341,000 bpd of capacity in the week ending June 2nd, increasing available refining capacity by 90,000 bpd from the previous week.  It also expects offline capacity to fall to 252,000 bpd in the week ending June 9th. 


Early Market Call - as of 11:55 AM EDT

WTI - July $48.35, down $1.31

RBOB - June $1.6027, down 3.74 cents

HO - June $1.5152, down 3.5 cents


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Oil prices held on to gains at start of U.S. summer driving season

May 30, 2017

Recap:  At the onset of Friday’s trading, oil prices extended their losses, with both blends falling as much as 1.4%. However, in what was perceived to be an overdone move to the downside, the selloff was reversed, as traders covered positions ahead of the long U.S. Memorial Day weekend, what is said to be the official start of the summer driving season. Despite the U.S. rig count rising for the 19th straight week, oil prices held on to gains. July WTI gained 90 cents, or 1.84%, to settle at $49.80 a barrel, while its European counterpart tacked on 69 cents, or 1.34%, to settle at $52.15 a barrel. 

June RBOB added 2.1% at $1.643 a gallon, ending 0.6% lower for the week, while June heating oil rose 0.8% to $1.563 a gallon, for a weekly loss of 1.2%.

Fundamental News Baker Hughes reported that US energy firms added oil rigs for a record 19 consecutive weeks.  Drillers searching for oil added two oil rigs in the week ending May 26th, bringing the total count up to 722, the most since April 2015. 

Saudi Arabia’s crude exports are expected to fall to 6.503 million bpd in May, falling below 7 million bpd for the first time in 2017.  Separately, according to two sources briefed on Saudi Arabia’s oil policy, Saudi crude shipments to the US will fall below 1 million bpd next month, a reduction of more than 15% from the average so far this year. 

The UAE’s Energy Minister, Suhail bin Mohammed al-Mazroui, said the extension of the global oil output cut deal will help to bring balance to the oil market and encourage investments in the oil sector. 

Russia’s Energy Minister, Alexander Novak, said that the monitoring committee may discuss possibility of adjusting options of a deal to cut production with OPEC at monitoring committee meeting.  At Thursday’s meeting, OPEC and some non-OPEC producers agreed to extend a pledge to cut about 1.8 million bpd of production until the end of the first quarter of 2018.  The initial agreement would have expired next month. 

Goldman Sachs stated that as the oil market responds skeptically to OPEC’s output cut agreement, the group has some challenges to tackle.  The organization will face the test of defending market share and generating revenue growth as it transitions from the cuts.  Additionally, backwardation will be needed for the cuts to achieve their goal of cutting an oversupply in stocks and prevent an unbridled increase in US shale production. 

Morgan Stanley lowered its end-2018 WTI crude price forecast to $55/barrel from a previous forecast of $60/barrel.  It also stated that OPEC’s extended cuts will likely lead to stock draws in the second quarter/third quarter and provide some oil price support.   

The EIA reported that US retail gasoline prices heading into the Memorial Day holiday weekend average $2.40/gallon nationally, up from $2.30/gallon last year. 

Colonial Pipeline Co is allocating Cycle 32 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Angola is expected to ship 52 crude cargoes in July with 1.62 million bpd, compared with 1.67 million bpd in June. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp terminal in the week ending May 26th fell by 13.48% on the week but fell by 27.71% on the year to 905,000 tons.  Gasoil stocks fell by 6.39% on the week and by 15.35% on the year to 2.784 million tons while fuel oil stocks increased by 11.92% on the week but fell by 9.71% on the year to 995,000 tons.  Naphtha stocks fell by 6.16% on the week but increased by 96.32% on the year to 320,000 tons while jet fuel stocks increased by 1.89% on the week and by 23.14% on the year to 809,000 tons.


Early Market Call - as of 11:55 AM EDT

WTI - July $49.24, down 56 cents

RBOB - June $1.6303, down 1.21 cents

HO - June $1.5461, down 1.67 cents


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Oil futures new highs were unsustainable after release of EIA report

May 25, 2017

Recap:  Already trading higher on the day, oil futures jumped to new highs on a larger than expected draw in U.S. crude oil inventories. However, the jump was short-lived, after traders took a more in depth look at the entire EIA report, which reflected less than expected draws in both gasoline and distillate numbers. Prices reverted to the down side, marking a new low for the day.  Losses were slightly trimmed, with July WTI dropping 11 cents, or 0.21% to settle at $51.36 a barrel, while July Brent slipped 19 cents, or 0.35%, to settle at $53.96 a barrel. Today’s lower settlement is the first in 6 days.

June RBOB fell less than a cent, or 0.5%, to $1.653 a gallon, while June heating oil finished little changed at $1.606 a gallon.

Fundamental News:  A five-country OPEC Monitoring Committee that includes Kuwait, Venezuela, Algeria, Russia and Oman recommended a nine-month extension to the OPEC and non-OPEC output cut agreement during a meeting on Wednesday.  Algeria’s Energy Minister, Noureddine Boutarfa, said nobody is opposed to a nine-month extension.

Saudi Arabia’s Oil Minister, Khalid al-Falih, reiterated that the country supports a nine-month extension of the OPEC and non-OPEC output cut agreement. 

Russia’s Energy Minister, Alexander Novak, supports a nine-month extension of the oil agreement.  However, he stated that several options were still being considered by the oil producers.  Russia has cut its output by an average of 310,000 bpd so far in May, over its 300,000 bpd output cut commitment. 

UAE Energy Minister, Suhail bin Mohammed al-Mazroui, said his country was ready to support either a six or a nine-month extension to an oil output cut agreement provided that it is supported by a majority.  He said the UAE expected full compliance with any deal reached at the OPEC meeting.

Kuwait’s Oil Minister, Ali Khalifa al-Sabah, said a 12-month extension of the output cut deal is not an option.  He said only a nine-month output extension will be considered at the meeting on Thursday.

According to analysis from BNP Paribas and Energy Aspects, the willingness by Iran’s Oil Minister, Bijan Namdar Zanganeh, to embrace a deal that leaves Iran room to pump about 3.8 million bpd signals the country is already pumping near capacity.  Iran’s Oil Minister said the country has no issue whether OPEC extended its output cut deal to six or nine-months.  He said OPEC will continue its production cuts but there is a debate among members about how long it will continue.  OPEC is expected to agree to extend current cuts by nine months at a Vienna meeting this week.  Iran pumped 3.76 million bpd in April, down slightly from January when it produced 3.8 million bpd.   

IIR reported that US oil refiners are expected to shut in 353,000 bpd of capacity in the week ending May 26th, increasing available refining capacity by 214,000 bpd from the previous week.  IIR expects offline capacity to fall to 341,000 bpd in the week ending June 2nd. 


Early Market Call - as of 9:00 AM EDT

WTI - July  $50.83, down 53 cents

RBOB - June $1.6487, down 46 points

HO - June $1.6042, down 13 points


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Oil prices gained for fifth straight session on hopes that OPEC will extend output cuts

May 24, 2017

Recap: Oil prices gained for the fifth straight session, supported by expectations that OPEC will extend recent output cuts, and may even deepen them.  Prices initially headed lower after U.S. President Trump proposed the possible sale of crude oil from U.S. strategic reserve stockpiles. July WTI fell just over 1%, reaching a low of $50.57, lower than Monday. A slow but steady rebound ensued as traders once again contemplated the upcoming OPEC meeting and the possibility of continued and/or additional decreases in output. July WTI clawed its way to a new daily high of $51.59, overshadowing that from Monday. This spot contract settled at $51.47 a barrel, up 34 cents or 0.7%. July Brent gained 28 cents, or 0.5%, to settle at $54.14 a barrel. Tuesday’s settlement marks the highest settlement in over a month for both blends.

June RBOB fell less than 1%, to $1.661 a gallon, while June heating oil added 0.3% to $1.607 a gallon.

Fundamental News:  Bloomberg reported that crude stocks in Cushing, Oklahoma fell by 100,000 barrels to 66.2 million barrels in the week ending May 19th.

The Trump administration’s plan to cut the national debt includes selling off half of the country’s 688 million barrel emergency oil stockpile.  President Trump’s first completed budget proposal would raise $500 million in fiscal year 2018 by draining the SPR and selling as much as $16.6 billion in oil over the next decade.  The budget proposal also includes the liquidation in fiscal 2018 of about 1 million barrels of gasoline reserves created in the aftermath of Hurricane Sandy in 2012.  The proposal also calls to open the Alaska National Wildlife Reserve to drilling.  It would raise $1.8 billion over the coming decade by leasing oil in the Arctic National Wildlife Reserve.   

OPEC delegates said OPEC will likely agree to extend production cuts for another nine months.  On Monday, Saudi Arabia’s Energy Minister, Khalid al-Falih, won support from Iraq for a nine-month extension and said he expected no objections from anyone else.  Meanwhile, Kuwait’s Oil Minister, Issam Almarzooq, said OPEC and non-OPEC oil producers have a preliminary agreement on at least a six month extension of crude production cuts with a revision in November for an additional three months.  However, he said that not all OPEC countries and its allies support a nine-month extension. 

Iraq’s Oil Minister, Jabbar Al-Luaibi, has promised to fully meet its share of the OPEC output cut in May. 

The UAE’s Energy Minister, Suhail bin Mohammed al-Mazroui, said the country supports extending oil output cuts for another term.

The semi-official Mehr news agency reported that Iran plans to increase its crude oil output by 8% or 300,000 bpd by March 2018.   

Mexico’s Deputy Secretary for Hydrocarbons, Aldo Flores-Quiroga, said the country supports an extension of OPEC’s supply cuts as a way to stabilize oil markets and bring new investment into the country’s growing energy sector. 

Norway’s Oil and Energy Ministry said the country has no plans to cut its oil output. 

According to IHS, crude and refined product shipments from the US Gulf increased to 4.02 million metric tons on 93 ships in the week ending May 18th. 

Customs data showed that preliminary US waterborne crude imports fell by 1.5 million bpd to 4.4 million bpd in the week ending May 18th. 

According to cFlow, Platts trade flow software, the amount of distillates expected to arrive in Europe from the Gulf Coast this month is about 1 million metric tons.  It is down from 1.25 million metric tons last month and nearly 2 million metric tons a year ago. 


Early Market Call - as of 9:00 AM EDT

WTI - July $51.29, down 18 cents

RBOB - June $1.6654, up 38 points

HO - June $1.6120, up 53 points


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Oil futures hit one month highs on hopes that OPEC will continue current output agreement

May 23, 2017

Recap:  Oil futures hit their highest level in one month on expectations OPEC will roll over the current output agreement and may possibly increase the size of their production cutbacks. July WTI rose to a high of $51.43, a gain of 76 cents, or 1.4% before paring gains, for a settlement of $51.13 a barrel, up 46 cents or 0.9%. Brent for July delivery rose 26 cents, or 0.5%, to settle at $53.87 a barrel. 

June RBOB rose a penny, or 0.6%, to $1.663 a gallon, while June heating oil added 1.9 cents, or 1.2%, to $1.602 a gallon.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, May 19th fell by 474,638 barrels on the week and by 46,241 barrels from Tuesday, May 16th to 68,281,787 barrels.

OPEC’s Secretary General, Mohammad Barkindo, said he saw a growing consensus among the group’s members as well as non-OPEC producers on the duration of an extension.  OPEC is scheduled to meet on Thursday to decide on its production policies after June. 

Saudi Arabia’s Oil Minister, Khalid al-Falih, said that an OPEC-led output cut had helped balance the market.  He said the industry had recovered but not completely.  He said he did not expect any opposition within OPEC to extending oil output cuts for a further nine months.  He said any decision would not be finalized until an OPEC meeting later this week.   

Iraq’s Oil Minister, Jabbar Al-Luaibi, said almost all countries agree on freezing oil output cuts.  He agreed with Saudi Arabia on the need for extending OPEC output cuts for a further nine months.  He said some ministers are thinking of a nine month extension to the output cut agreement, while others are thinking of a six month extension.  Separately, he stated that Iraq vows to keep investing in oil even if the price falls to $10/barrel.  He said Iraq will meet demand growth when the inventory overhang clears.     

Iraq pumped about 80,000 bpd more than permitted under the OPEC agreement during the first quarter.  According to analysts, if the deal gets extended to 2018, the country will have even less incentive to comply because capacity at key southern fields is expanding and three years of fighting Islamic state has left it drowning in debt. 

Qatar’s Oil Minister, Mohammad Al-Sada, joined an increasing number of major oil producers calling for an extension to the OPEC and non-OPEC output cut deal to the end of March 2018.  So far, Algeria, Iran, Iraq, Kuwait, Saudi Arabia, the UAE and Venezuela have all said they support some form of extension to the output cuts. 

Goldman Sachs reported that US production may increase by 290,000 bpd on average year on year in 2017 if the rig count remains at the current level.  In regards to OPEC, Goldman Sachs said OPEC should announce a decisive cut on May 25th, as normalizing stocks is a required first step.  It said a nine month extension of the OPEC cuts could normalize OECD stocks by early 2018 but it sees the risks of a renewed surplus later next year.  It said its second half of 2017 Brent spot price forecast remains at $57/barrel.  It said if backwardation is not achieved, however, it see risks that prices fall sharply next year as OPEC reverts to increasing market share through volumes. 

Libya’s National Oil Corp said the country’s oil production has recovered to 788,000 bpd and output should continue expanding in the next few days as the Messla and Sarir oil fields continue to recover after restarting in mid-May. 


Early Market Call - as of 9:00 AM EDT

WTI - July $51.22, up 9 cents

RBOB - June $1.6559, down 65 points

HO - June $1.6046, up 26 points


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Oil futures traded higher for second straight week as traders await OPEC meeting

May 22, 2017

Recap:  Oil futures posted sharp gains on Friday, trading higher for the second straight week, as traders await the outcome of the upcoming OPEC meeting. July WTI gained as much as 2.3%, rising above $50 a barrel for the first time since May 1, working its way toward the $51 mark to peak the session at $50.80. Gains were pared, with this soon to be spot month settling at $50.33, up 98 cents, or 1.99%. July Brent shot up 2%, reaching a high of $53.74 a barrel, slipped slightly to settle at $53.61 a barrel, up $1.10, or 2.09%. 

RBOB rose 2.7% to $1.650 a gallon, while June heating oil added 2.5% to $1.583 a gallon.

Fundamental News:  Baker Hughes reported that US oil drillers added 8 rigs in the week ending May 19th, bringing the total count to 720, the most since April 2015.

OPEC sources stated that an OPEC panel reviewing scenarios for the group’s meeting next week is looking at options of deepening and extending a deal to reduce crude output.  A source said a deeper cut in output was an option depending on estimated growth in supply from non-OPEC producers, mainly US shale oil companies, among other scenarios.

According to a Bloomberg survey, OPEC will extend its output cut agreement, even as increasing US output threatens the group’s goal of depleting excess supply.  Analysts polled stated that OPEC and non-OPEC producers will extend their cuts for at least six months when they meet on May 25th. 

After OPEC’s production cuts took effect in January, oil traders started depleting millions of barrels of crude from storage tanks.  However, many of those storage tanks are filling back up or draining at a slower than expected pace.  The stalled drawdowns shed light on the broader challenge facing OPEC as it struggles to steer the industry out of a downturn caused by oversupply, amid increasing US shale production, high inventories and prices remaining in the low-$50s/barrel range.  The market has not strengthened enough to drain many major storage facilities around the world.  Estimated inventories in industrialized countries totaled 3.025 billion barrels at the end of March, about 300 million barrels above the five-year average, according to the IEA.  Preliminary April data indicated stocks would increase further.   

The API said spring started with US drivers consuming a record amount of gasoline.  US gasoline consumption in April increased 0.6% on the year to 9.27 million bpd.  Total fuel deliveries increased by 1.7% to the highest April total since 2008. 

According to the EIA, US gasoline demand has been weaker than expected this year, but a growing economy and low pump prices have the energy industry expecting record demand again this summer driving season.  The EIA reported that gasoline demand in the first two months of 2017 was down 2.1% on the year.  Motorists are expected to hit US roads at rates not seen in a decade.  The AAA projected that 34.6 million people will drive 50 miles or more from home during the end-of-month holiday period, the most since 2005 when 37.3 million motorists hit the roads. 

Nigeria’s Petroleum and Natural Gas Senior Staff Association of Nigeria labor union called for the shutdown of all Exxon Mobil Corp facilities in the Niger Delta.  The call followed the breakdown of talks with the company over sackings and was part of a strike that began last week. 


Early Market Call - as of 9:00 AM EDT

WTI - June $50.72, up 37 cents

RBOB - June $1.6583, up 52 points

HO - June $1.5990, up 1.6 cents


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