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Market Intel Archives

WTI tumbled as release of EIA report indicated a smaller draw in crude oil than expected

May 04, 2017

Recap:  Trading in oil futures was choppy on Wednesday, as traders continue to grapple with increasing U.S. production amid supply overhangs and OPEC’s adherence to the agreed upon output cuts. WTI tumbled 68 cents upon the immediate release of the EIA report, which reflected a drop of 930,000 barrels of crude oil, much less than the forecasted draw of 2.3 million barrels. Prompting the sell-off, was the year-on-year 2.7% slip in gasoline demand. What makes this number significant is that demand for gasoline has been falling since the onset of 2017, and with the U.S. summer driving season on the horizon, traders are focusing on this key factor. 

June WTI continued to seesaw around the unchanged ($47.66) level for the remainder of the session, eking out a gain of 16 cents, or 0.34%, to settle at $47.82 a barrel. Brent for July delivery tacked on 33 cents, or 0.65%, settling at $50.79 a barrel.

June RBOB rose by 1.3% to $1.534 a gallon, while June heating added 0.4% to $1.474 a gallon.

Fundamental News:  According to a Russian government official, the country considers it sensible to extend the existing deal with OPEC to cut crude production for at least six months.  Russia exceeded its target of cutting production by 300,000 bpd from October levels by 790 bpd on May 1st.  Russia’s oil production in April fell 0.5% on the month to 10.995 million bpd.  Russia will maintain that output level through June under the current deal.  The official said Russia is satisfied with the way global inventories are declining. 

Bloomberg reported that OPEC strengthened its compliance with production cuts in April.  Production fell by 40,000 bpd on the month to 31.895 million bpd.  Total output, including Libya and Nigeria, remained 135,000 bpd above its target, putting the group at about 90% in compliance with its agreement.  It reported that Iraq produced 4.41 million bpd, down 20,000 bpd.  Venezuela saw a 20,000 bpd decline in output to 1.98 million bpd while Saudi Arabia’s production was steady at 9.95 million bpd.  Libya’s oil output fell by 70,000 bpd in April, while Nigeria increased its output by 50,000 bpd on the month. 

Colonial Pipeline is allocating Cycle 27 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, said Saudi Arabia will retain full ownership of its oil and gas reserves and sole decision-making authority on production levels after Saudi Aramco’s initial public offering. 

Standard Chartered stated that US total oil production, including crude, NGLs and ethanol, will reach a record high this month.  Total output will average 14.18 million bpd in May. 

GMP FirstEnergy has cut its forecasts for WTI and Brent.  WTI is forecast at $56.50/barrel in 2017, down from a previous forecast of $58/barrel while Brent is forecast to average $59.03/barrel this year, down from $60.50/barrel. 

IIR reported that US oil refiners are expected to shut in 490,000 bpd of capacity in the week ending May 5th, increasing available refining capacity by 239,000 bpd from the previous week.  IIR expects offline capacity to fall to 471,000 bpd in the week ending May 12th. 

The Federal Reserve held short-term interest rates steady and offered little indication that recent softness in economic data would change its plans to proceed with gradual interest rate increases this year.  Following a two-day policy meeting, officials unanimously held their benchmark rate steady in a range between 0.75% and 1%, while noting that slow growth earlier this year was likely to be transitory. 


Early Market Call - as of 9:00 AM EDT

WTI - June  $46.98, down 85 cents

RBOB - June $1.5074, down 2.62 cents

HO - June $1.4525, down 2.10 cents


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Production in U.S. and Libya continue to erase oil future gains

May 03, 2017

Recap: Early morning gains in oil futures were erased on Tuesday, as increased production in the U.S. and Libya continue to test output cuts by OPEC and other major producers. Prices rose right out of the gate, with June WTI trading back above $49 a barrel, and July Brent breaching $52 a barrel. However, a steady decline ensued, with both blends dipping below unchanged, remaining there for the rest of the session. June WTI touched a low of $47.49 a barrel, while Brent hit $50.03 a barrel. June WTI settled at $47.66, down $1.148, or 2.42%, while July Brent fell $1.06, or 2.06%, to settle at $50.46 a barrel. This is the lowest settlement for WTI since March 21 and for Brent since November 29.

June RBOB fell 1.36 cents, or .9% to settle at $1.5136 a gallon, while June heating oil fell 1.98 cents, or 1.3%, settling at $1.468 a gallon.

Fundamental News:  According to Bloomberg, crude oil stocks held in Cushing, Oklahoma fell by 1.2 million barrels to 66.2 million barrels in the week ending April 28th.

Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, ruled out any talks with Iran, a country, he said, was plotting to control the Muslim world.  He said Saudi Arabia could crush Iran-aligned fighters in Yemen, where Saudi forces head a coalition of Gulf Arab states intervening in a civil war. 

According to Reuters survey, OPEC’s oil output fell for a fourth consecutive month in April falling to 31.97 million bpd as Nigeria and Libya produced less crude.  Reuters reported that compliance of 90% is still higher than it achieved in its last cut in 2009.  Saudi Arabia cut its output by 574,000 bpd. 

Russia’s Energy Ministry reported that the country’s oil output fell slightly in April by 0.5% to 10.995 million bpd.  It is still 1.6% higher than last year’s level.   

The UAE’s Energy Minister, Suhail Al-Mazrouei, said it would be logical to extend the oil output cuts.  He said all producers will need to commit to any extension of the cuts beyond June. 

Libya’s National Oil Corp said the country’s oil production had increased over 760,000 bpd to its highest level since December 2014. 

The Chairman of consultants FGE, Fereidun Fesharaki, said OPEC producers are 100% certain to extend the output deal at its May 25th OPEC ministerial meeting in Vienna.  He said that while a six month deal was initially envisaged, OPEC may need cut its output until well into 2018, as work on cutting global inventories continues, or they risk oil prices falling back to $40/barrel if stocks, particularly in the US, increase. 

BP’s Chief Financial Officer, Brian Gilvary, said oil inventories would keep falling this year.  He said an extension of the OPEC-led output cuts into the second half of the year would help bring global oil inventories back to a five-year average by the end of the year and support prices at about $55/barrel. 

Bloomberg reported that preliminary US waterborne crude imports fell by 1.6 million bpd to 4.5 million bpd in the week ending April 27th.  Total crude and product imports also fell by 1.6 million bpd to 6.5 million bpd. 

Genscape reported that waterborne US crude exports increased by 5.662 million barrels to 9.025 million barrels or 1.289 million bpd in the week ending April 21st.  The largest portion of the US exports of 3.01 million barrels on two ships were bound for East Asia.  Refiners in the Caribbean were set to take in 2.42 million barrels of crude. 


Early Market Call - as of 9:50 AM EDT

WTI - June $47.84, up 18 cents

RBOB - June $1.5295, up 1.55 cents

HO - June $1.4696, up 15 points


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Oil futures hit lowest level in five weeks as output in Libya gains traction

May 02, 2017

Recap: Oil futures settled at their lowest level in five weeks on Monday, as U.S. production continues to rise and as output in Libya gains traction. Both Brent and WTI were unable to muster enough strength to trade above unchanged in early morning trading and by 9:00am EST, the lows of the day were established, with prices making only slight rebounds. June WTI fell 49 cents, or 0.99%, to settle at $48.84 a barrel, while Brent for July delivery slipped 53 cents, or 1.02%, settling at $51.52 a barrel.

June RBOB fell 2.11 cents, or 1.4% to settle at $1.527 a gallon, while June heating oil fell 1.92 cents, or 1.3%, settling at $1.488 a gallon.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, April 28th fell by 1,246,350 barrels on the week and by 378,707 barrels from Tuesday, April 25th to 68,679,455 barrels.

The IEA stated in its latest monthly report that oil stocks in industrialized countries were about 336 million barrels above the five-year average. 

Iran’s President Hassan Rouhani said the country is now self-sufficient in petroleum production as he opened a refinery in the southern city of Bandar Abbas.  The refinery has the capacity to produce 12 million liters of Euro IV petrol.  Once fully operational, the refinery will produce 36 million liters of petrol. 

Libya’s crude production rebounded to more than 700,000 bpd as the Sharara field resumed operations.  The Sharara field is currently producing 216,400 bpd while the El Feel or Elephant oilfield is producing 26,500 bpd and is expected to increase its output further. 

The UAE is cutting supplies to customers in June as part of its agreement with OPEC to cut production.  Abu Dhabi National Oil Co will reduce sales by 10%. 

According to JBC Energy, OPEC’s oil production in April fell by 20,000 bpd to 31.72 million bpd.  OPEC’s production in March was revised down by 300,000 bpd to 31.74 million bpd. 

Suncor Energy Inc confirmed the restart of pipeline shipments from the Syncrude Mildred Lake oil sands facility.  It said shipments are currently at about 140,000 bpd and are expected to ramp up as additional units complete turnaround activities.  Production is expected to return to full rates in June. 

IIR reported that US oil refiners are expected to shut in 414,000 bpd of capacity in the week ending May 5th, increasing available refining capacity by 268,000 bpd from the previous week.  IIR expects offline capacity to increase to 471,000 bpd in the week ending May 12th. 


Early Market Call - as of 9:00 AM EDT

WTI - June $48.77, down 8 cents

RBOB - June $1.5337, up 65 points

HO - June $1.4904, up 24 points


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Oil futures rebounded on Friday on hopes OPEC will extend agreement to cut output

May 01, 2017

Recap: Oil futures rebounded on Friday after reaching a one-month low on Thursday, trading higher on growing optimism OPEC will extend its six-month agreement to cut output. June WTI gained as much as 1.6%, and June Brent tacked on as much as 1.3% during the trading session. Due to the recent negative sentiment, the upside was unable to gain momentum, a sell-off followed, with prices making fresh session lows. End of the month squaring came into play, with prices retracing some of the daily losses, to finish up on the day. June WTI settled at $49.33 a barrel, a gain of 36 cents, or 0.74%. June Brent finished up 29 cents, or 0.56%, settling at $51.73 a barrel.

May RBOB fell by 2.5% to $1.55 a gallon and May heating oil lost 1.9% to $1.507 a gallon. The May contracts for both products expired at the end of Friday’s session.

Fundamental News:  Baker Hughes reported that the number of rigs searching for oil increased by 9 to 697 rigs in the week ending April 28th.

OPEC’s Secretary General, Mohammad Barkindo, said the oil market will reach a balance between supply and demand in the second half of the year.  He said the land-based inventory surplus in developed economies fell from February to March by about 39 million barrels.

Russia’s Energy Minister, Alexander Novak, said the country has fully implemented the production it promised in a December deal with OPEC.  The country’s output reduction has reached the agreed 300,000 bpd.  He added that Russia will define its position on an extension of an output cut agreement by May 24th.  He said he discussed the oil market with Venezuela’s Oil Minister and added that he is discussing a possible meeting with his Saudi counterpart.  Meanwhile, Saudi Arabia’s Energy Minister, Khalid al-Falih, welcomed the news, saying Russia’s contribution was good and that overall non-OPEC compliance was 85% while OPEC members’ compliance was 100%.  He also stated that global oil demand in the second half of the year was likely to be higher than the first half of the year.   

OPEC reported that its members and non-OPEC producers who agreed to cut production reached 98% conformity with their targets in March, compared with 94% in February. 

Petrologistics reported that Saudi Arabia’s crude exports fell by 330,000 bpd in April from the previous month. 

Libya’s National Oil Co confirmed it lifted the force majeure at the Zawiya oil port.  It also stated that Sharara will immediately add 200,000 bpd of production after it resumed operations.  Libya’s 80,000 bpd El Feel oilfield, which depends on power supply from Sharara, is also expected to restart operations.

The EIA reported that US oil production in February increased by 193,000 bpd to 9.03 million bpd.  January’s crude production was revised up by 3,000 bpd to 8.84 million bpd.  Output in North Dakota increased by 43,000 bpd while production in Texas increased by 119,000 bpd.  Production offshore in the US Gulf fell by 22,000 bpd.  It reported that US gasoline demand fell by 2.4% or 218,000 bpd in February from a year earlier to 8.988 million bpd.  Distillate demand fell by 1.4% or 54,000 bpd to 3.905 million bpd.  US total oil demand in February fell by 2.5% or 492,000 bpd on the year to 19.18 million bpd.    


Early Market Call - as of 9:00 AM EDT

WTI - June $48.96, down 37 cents

RBOB - May $1.5410, down 71 points

HO - May $1.4952, down 1.18 cents


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Oil futures hit one month low after Libya's Sharara oil field restarted crude through pipeline

April 28, 2017

Recap: Oil futures fell to a one month low after the European Central Bank left interest rates unchanged, and as oil began to flow through one of Libya’s pipelines. Both of these factors had a domino effect on the U.S. dollar, which also aided in pressuring oil prices. Futures fell as much as 2.8% prior to paring losses. June WTI settled at $48.97 a barrel, down 65 cents, or 1.31%. Brent for June delivery slipped 38 cents, or 0.73%, to settle at $51.44.

May RBOB fell by 2.5% to $1.55 a gallon and May heating oil lost 1.9% to $1.507 a gallon. The May contracts for both products will expire at the end of Friday’s session.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, April 25th fell by 1,213,327 barrels on the week and by 867,643 barrels from Friday, April 21st to 69,058,162 barrels.

OPEC’s Secretary General, Mohammad Barkindo, said an overhang in global oil inventories was declining but stockpiles still need to fall closer to the five year average.  However, he said market rebalancing is heading in the right direction. 

Saudi Arabia’s Energy Minister, Khalid al-Falih said that he will talk with Russia’s Energy Minister, Alexander Novak, by phone this week and meet him within the next two weeks.  Venezuela’s Oil Minister, Nelson Martinez, was also planning to visit Moscow after talks in Algeria on April 26th.  Separately, Saudi Arabia’s Oil Minister and Azerbaijan’s Energy Minister agreed to support a global oil output cut deal. 

Iraq’s Oil Minister, Jaber al-Luaibi, said the country will go with the consensus reached by OPEC when the oil exporter group meets in Vienna next month to discuss extending production cuts.  Iraq believes it would be acceptable for the output cut agreement to remain in place beyond June.  He said Iraq was in full compliance with the OPEC-led supply agreement reached last year and has achieved about 97% of its output reduction target.  He added that the OPEC-led cuts were gradually leading to a long-awaited rebalancing of the oil market. 

Angola’s Oil Minister, Jose Maria Botelho de Vasconcelos, said he believed the OPEC/non-OPEC output cut agreement will be extended beyond June. 

Saudi Aramco’s CEO, Amin Nasser, said oil demand growth will continue to remain healthy for the foreseeable future and added that the idea of peak oil demand is as misleading as theories on peak supply.  He said the oil market is moving towards a balance with the help of an agreement reached between OPEC and non-OPEC producers.  He also stated that the oil industry needed to continue investing in long-term projects despite short term price volatility.   

Libya’s 300,000 bpd Sharara oilfield restarted as crude began to move through a pipeline connected to the Zawiya refinery after the end of protests by an armed group.  The pipeline carrying Sharara crude to the Zawiya refinery had been blocked in early April, halting production.  No details were immediately available about current output at the field.  A force majeure on exports of the grade was lifted on Thursday.  A Libyan oil source said the El Feel oilfield, with a capacity of 90,000 bpd, was also restarted.  Libya’s National Oil Corp is aiming to raise the country’s output to 1.1 million bpd in August from a current level of 491,000 bpd.  Meanwhile, there is an OPEC consensus that Libya should remain exempt from production cuts. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.38, up 41 cents

RBOB - May $1.5659, up 1.44 cents

HO - May $1.5115, up 41 points


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Oil prices moved higher after EIA report indicated 3.6 million barrel fall in US crude oil stocks

April 27, 2017

Recap: Oil prices shot up from below unchanged after the EIA report indicated U.S. crude oil stocks fell 3.6 million barrels during the week of April 21. This was much larger than the expected 1.7 million barrel decrease. In a knee jerk reaction, June WTI jumped to a high of $50.20 on the day but once again was unable to sustain gains. Trading proceeded in a sideways pattern between $49.90 and $49.68, with the trading range narrowing as it closed in on the bottom of this range. Unexpected increases in both distillate and gasoline stockpiles eventually overshadowed the depletion in crude oil inventories, making it difficult for oil prices to stage a comeback. Just prior to settlement, a sell-off ensued, and continued into post settlement trading, with June WTI trading below unchanged after the settlement. June WTI finished at $49.62 a barrel, up 6 cents, or 0.12%. June Brent slipped 28 cents, or 0.54%, to settle at $51.82 a barrel.

May RBOB fell 3.3 cents, or 2%, to $1.59 a gallon and May heating oil lost nearly a cent, or 0.6%, to $1.537 a gallon.

Fundamental News:  Saudi Arabia’s Energy Minister, Khalid al-Falih, said he is interested in further talks between OPEC and non-OPEC producers aimed at stabilizing oil prices. He plans to meet with his Russian counterpart, Alexander Novak, within the next two weeks to discuss the agreement between OPEC and non-OPEC states to support oil prices.  He also stated that he intended to speak to Novak by phone “hopefully this week.”  He said “we will develop a decision that everybody has to support”, when asked if the six month agreement on global output cuts would be extended.  He sees a general consensus for an extension of the output cut agreement.

According to the Abu Dhabi Investment Authority’s head of research, Christof Ruehl, crude oil prices will fall to less than $40/barrel if OPEC and non-OPEC producers do not extend their collective cuts in output beyond June.  He said the six month agreement has set a floor for prices, but an increasing supply of US shale oil and record high inventories are keeping the price of crude from rising beyond the upper $50s. 

Bloomberg Intelligence reported that the number of rigs in the Bakken have increased by almost 50% so far this year to 46 in the week ending April 14th from 30 in January.  Bakken oil production stands at about 1 million bpd or 11% of US output.

Colonial Pipeline Co is allocating space for Cycle 25 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.

Genscape reported that crude stocks in the ARA region increased by 1.27 million barrels to 61.45 million barrels in the week ending April 21st. 

Nigeria’s loading plans published so far show a decline in crude exports in June.  Programs for 12 of the country’s 18 main grades of crude show combined shipments of 42 cargoes totaling about 38 million barrels or about 1.27 million bpd.  It is down from 46 cargoes totaling 42.2 million barrels or 1.36 million bpd in May. 

Two tankers carrying 60,000 ton cargoes of diesel have been booked in recent days out of New York Harbor and bound for Northwest Europe. 

IIR reported that US oil refiners are expected to shut in 670,000 bpd of capacity in the week ending April 28th, increasing available refining capacity by 57,000 bpd from the previous week.  IIR expects offline capacity to fall to 408,000 bpd in the week ending May 5th. 


Early Market Call - as of 9:00 AM EDT

WTI - May $48.57, down $1.05

RBOB - May $1.5479, down 4.22 cents

HO - May $1.5033, down 3.37 cents


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Oil prices settled up on expectations of 1.7 million barrel draw in U.S. crude oil inventories

April 26, 2017

Recap: After obtaining its lowest settlement since March 28, WTI bounced back on Tuesday, stemming 6 days of declines, on expectations of a 1.7 million barrel draw in U.S. crude oil inventories. June WTI gained as much as 1.09% prior to paring gains for a settlement of $49.56 a barrel, up 33 cents, or 0.67%. June Brent tacked on 50 cents, or 0.97%, to settle at $52.10 a barrel.

Despite today’s comeback, this market is still suffering from an oversupply situation, making it a less attractive investment, and in turn, making it difficult for advances to be sustained. Higher U.S. production has so far managed to negate OPEC output cuts and will most likely do so as long as OPEC does not take serious steps to cut output by extending its agreement.

May RBOB closed at $1.623 a gallon, up 0.1%, while May heating oil gained 0.2%, to settle at $1.545 a gallon.

Fundamental News Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 700,000 bpd to 67.9 million barrels in the week ending April 21st. 

Qatar’s Energy Minister, Mohammed al-Sada, is satisfied with the level of compliance by OPEC and non-OPEC producers with an agreement reached last year to cut output. 

Russia’s Energy Minister, Alexander Novak, said Russia needs to see more technical analysis of the global oil market and stock levels before deciding to extend an oil supply reduction agreement.  Russia’s Energy Minister will hold talks with Russian oil companies this week before his meeting with OPEC and non-OPEC counterparts in Vienna on May 25th.  Analysts predict Russia will prolong the cuts, despite the problems this could cause for its largest producers. 

Separately, Russia’s Deputy Prime Minister, Dvorkovich, said Russia is ready to maintain its current oil output and may increase it provided there are no risks of price declines.  He said a fragile balance has settled on the global oil market. 

Azerbaijan’s Energy Minister, Natig Aliyev, said he would discuss a possible extension of the global oil output cut deal at a meeting with his Saudi counterpart on Wednesday. 

The head of industry consultant FGE, Fereidun Fesharaki, said the OPEC cuts need to be prolonged until the first half of next year for the goal to be met. 

According to Bloomberg, preliminary US waterborne crude imports increased by 1.2 million bpd to 5.5 million bpd in the week ending April 20th.  The Gulf Coast saw the largest increase of 878,600 bpd to 3.4 million bpd, while imports to the East and West Coast increased by 7,500 bpd and 335,400 bpd, respectively.  Total crude and product imports increased by 718,600 bpd to 7.2 million bpd. 

IHS data showed that crude and refined product shipments from the US Gulf reached 4.19 million metric tons on 101 ships in the week ending April 20th. 

Shell completed planned maintenance at the Bonga oilfield offshore Nigeria and resumed production on April 8th.  The field has the capacity to produce 225,000 bpd of oil and 150 million standard cubic feet of gas. 

Pemex completed a $133.5 million hedging program that will give it the right to sell up to 409,000 bpd of oil at $42/barrel from May through December.  The program offers Pemex price protection if oil trades between $37-$42/barrel for the rest of the year, which the company said is the most likely bear case for Mexican oil.  If oil prices fall to $37/barrel, Pemex would receive the maximum protection under its hedging contracts. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.14, down 42 cents

RBOB - May $1.6000, down 2.16 cents

HO - May $1.5318, down 1.36 cents


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Oil futures unable to sustain gains as skepticism remains over extension of OPEC output cuts

April 25, 2017

Recap: Oil futures opened the session trading to the upside, but were unable to sustain gains, as U.S. production once again overshadowed possibilities that OPEC would extend output cuts. After reaching a high of $50.22, June WTI slipped $1.19, to a low of $49.03, and then proceeded to fall into a 25 cent trading range for the remainder of the session. A lack of hedge fund buying, along with skepticism over the extension of OPEC output cuts has taken strength out of this market. June WTI fell 39 cents or 0.8%, to settle at $49.23 a barrel, while Brent for June delivery lost 36 cents, or 0.7%, to settle at $51.60 a barrel.

May RBOB fell 2.31 cents, or 1.4%, to settle at $1.6214 a gallon. Heating oil for May delivery settled at $1.5427, down 1.06 cents, or 0.68%.

Fundamental News:  Genscape reported that crude oil inventories held in Cushing, Oklahoma in the week ending April 21st fell by 1.1 million barrels on the week and by 346,000 barrels from Tuesday, April 18th to 69.9 million barrels on the week. 

The meeting of a technical committee of OPEC and non-OPEC nations in Vienna concluded that a six month extension of output cuts would be necessary. 

Iran’s Oil Minister, Bijan Namdar Zanganeh, said it is unrealistic to expect oil at $60/barrel. 

According to comments by Russian officials and details of investment plans released by oil firms, Russia’s oil output could increase to its highest level in 30 years if OPEC and non-OPEC producers do not extend a supply reduction deal beyond June 30th.  Russia’s Deputy Prime Minister, Arkady Dvorkovich, said investment programs show that it is possible that Russia’s oil production will increase once the deal expires.  He did not give figures but Russia’s Energy Minister, Alexander Novak, previously stated that the country’s output could reach 548-551 million tons a year or 11.01-11.07 million bpd in 2017, the highest average since 1987.  Under the deal with OPEC, Russia was to cut production to 10.947 million bpd from 11.247 million bpd. 

Societe Generale reported that OPEC will rollover its crude supply target of 32 million bpd in the second half of the year.  This will result in global draws of 1 million bpd over the same period. 

Libya’s National Oil Corp said the country’s Elephant oilfield remains shut in and requires power supply from the country’s largest oil field, the Sharara field, in order to restart.  Denying a report that the field had resumed operations after a two year halt, it said the Elephant field remains under force majeure status.   

Goldman Sachs reported that US production may increase by 535,000 bpd between the fourth quarter of 2016 and fourth quarter of 2017 across the Permian, Eagle Ford, Bakken and Niobrara shale plays, assuming the rig count remains at the current level. 

IIR reported that US oil refiners are expected to shut in 740,000 bpd of capacity in the week ending April 28th, increasing available refining capacity by 142,000 bpd in the previous week.  IIR expects offline capacity to fall to 558,000 bpd in the week ending May 5th.

Pennsylvania’s Department of Environmental Protection and the Pennsylvania Petroleum Association said the US state of Pennsylvania has no plans to restrict the sale of heating oil with more than 15 ppm sulfur on a statewide basis, denying a rumor that such a change would be implemented on June 1st.

The Bank of America Merrill Lynch said the Atlantic Basin gasoline market is expected to weaken into the second half of the year. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.16, down 7 cents

RBOB - May $1.6103, down 1.10 cents

HO - May $1.5409, down 18 cents


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Growing US production continued to outweigh output cuts by OPEC

April 24, 2017

Recap: WTI traded below $50 a barrel for the first time in two weeks, as growing U.S. production outweighed output cuts made from within OPEC and among some non-OPEC producers. Attempts to reverse course were met with resistance and prices once again turned to the downside. By early morning trading, volume was high, with June WTI posting more than 400,000 contracts traded. This spot contract fell $1.09, or 2.15%, to settle at $49.62 a barrel, its lowest settlement in a month. June Brent settled at $51.96 a barrel, down $1.03, or 1.94%. Prices declined approximately 7% on the week.  

May RBOB fell 1.6% to $1.645 a gallon, down about 5.2% for the week, and May heating oil slipped 1.6% to $1.553 a gallon, for a weekly loss of 5.8%.

Fundamental News:  An OPEC monitoring committee recommended that producers extend the global agreement to cut supplies for six months from its June expiry.  The conclusion coincides with recent statements from oil ministers in Saudi Arabia, Kuwait and other members of OPEC.  Saudi Arabia and Kuwait favor extending their production-limiting agreement with non-OPEC producers into the second half of the year.  Meanwhile, Russia’s Energy Minister, Alexander Novak, declined to say whether Russia would adhere to an extension before a joint meeting on May 25th, saying global stocks were declining.  He said Russia’s output cuts had reached 250,000 bpd and would reach a targeted 300,000 bpd by the end of April. He also stated that the total cuts in global oil production in March amounted to 1.7 million bpd.  

Iran’s crude oil exports are set to reach a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.  Crude oil loadings from Iran are expected to total 1.66 million bpd in May, down from 1.8 million bpd in April.  Part of the decline may also be attributable to a decline in demand, as loadings bound for India are set to fall to a one-year low after a dispute over the award of a contract for a gas field, and Japan’s orders fell by more than half from April.  Iran is storing about 3 million barrels back into storage in May. 

Baker Hughes reported that US drillers added oil rigs for a 14th consecutive week.  The number of rigs searching for oil in the week ending April 21st increased by 5 to 688, the most since April 2015. 

Libya’s El-Feel oil field reopened on Tuesday after a two year halt in operations.  The field has not resumed pumping oil yet due to an electricity outage.  Authorities are working to resolve the power outage soon. 

Exports of Nigeria’s Bonny Light crude are expected to total 203,000 bpd in June, up from 189,000 bpd in May. 

According to Thomson Reuters Eikon, a record 48 million bpd of crude is being shipped across ocean waters in April, up 5.8% since December. 

Oil Movements reported that the volume of crude in transit is forecast to increase to 487 million barrels in the four week period ending May 6th. 

Goldman Sachs said there is no fundamental reason in the market to justify this week’s selloff in prices.  It said the pace of declines in US crude inventories is encouraging, with an acceleration in drawdowns expected through the second quarter as OPEC cuts output and demand increases.  Goldman Sachs reiterated its confidence in oil at a time when investors are concerned over whether US production will undermine cuts by OPEC and non-OPEC producers.


Early Market Call - as of 9:00 AM EDT

WTI - June $49.62, unchanged

RBOB - May $1.6379, down 60 points

HO - May $1.5564, up 35 points


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OPEC output cuts and increases in US production left oil futures around unchanged

April 21, 2017

Recap: Oil futures bounced around the unchanged level, trading within a 30 cent range for most of the session, as traders continue to sort through OPEC output cuts and increases in U.S. production. Waning confidence in OPEC’s agreement to cut back on output, combined with growing U.S. production has taken the wind out of the recent ascent in prices, as is evident in calendar spreads. Weakness in these spreads extends from the June17-July17 spread all the way through to December17-January18. After peaking at -0.06 in December, the discount in the June17-July17 WTI spread has weakened by more than 30 cents. This, along with falling open interest, indicates doubts that this market will be able to sustain strength. 

June WTI, made new lows in post settlement trading, falling below the 30-day moving average of $50.77. This allows for a run at support set at $50.35. Below this level, support can be found at $49.70. Above the market, resistance can be found at $50.85 and $51.30.  June WTI settled at $50.71, down 14 cents, or 0.3%. June Brent finished up 6 cents, or 0.11%, settling at $52.99.

May RBOB gained 0.7% to $1.671 a gallon and May heating oil finished down by 0.2% to $1.579 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, April 18th fell by 740,418 barrels on the week and by 708,024 barrels from Friday, April 14th to 70,271,490 barrels. 

Saudi Arabia’s Oil Minister, Khalid al-Falih, said crude producing countries reached an initial agreement to extend output cuts.  He said OPEC and other major producers have failed, after three months of cutting production, to achieve their target of reducing oil inventories below the five-year historical average, although there is a high level of commitment.  He said countries participating in the cuts have yet to reach a consensus on continuing their agreement into the second half of the year, and an extension would not necessarily be for an additional six months.  Separately, Oman’s Oil Minister, Mohammed Al-Rumhy, said Gulf Cooperation Council countries agreed to push for an extension of cuts during a meeting on Wednesday.  He said a high number of producers favored extending a supply restraint agreement.  Iran and Venezuela have expressed support for an extension of the cuts.  Meanwhile, Kuwait’s Oil Minister, Issam Almarzooq, stated that if OPEC and non-OPEC oil producers decide to extend their six month agreement on output cuts, the cuts may become less deep as oil demand is expected to be stronger for seasonal reasons in the second half of 2017.  In regards to Iran, he stated that Iran’s Oil Minister made a commitment to freeze output at 3.8 million bpd for the rest of the year on the assumption that the cuts are extended beyond June. 

Russia’s Energy Ministry said it is still too early to comment if the oil output deal between OPEC and non-OPEC producers will be extended through the second half. 

The leader of Iraq’s Shi’ite ruling coalition, Ammar al-Hakim, said Iraq supports an extension of a deal between oil exporters to reduce global supply in order to support crude prices. 

According to the EIA, crude imports from Saudi Arabia increased by 34% to 1.19 million bpd in the week ending April 14th. 

Venezuela is scheduled to unload 13 tankers carrying oil products this month, the highest this year, as PDVSA’s refineries continue to struggle. 

Libya’s El Feel or Elephant oil field is expected to resume operations. 


Early Market Call - as of 9:00 AM EDT

WTI - May $50.62, down 2 cents

RBOB - May $1.6717, up 12 points

HO - May $1.5776, down 13 points


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