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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