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Market Intel Archives

Oil market finds support overnight by strong Chinese crude imports

January 16, 2017

Recap: The oil market posted an inside trading day on Friday as the market failed to breach its previous trading range.  The market, which posted a high of $53.17, was supported overnight by strong Chinese crude imports, which increased by 14% in 2016 to 381.01 million metric tons or 7.65 million bpd.  However, the crude market's gains were limited by concerns over China's economic health.  China's overall exports in 2016 fell by 7.7%.  The export decline was the second annual decline in a row and the worst since the depths of the global crisis in 2009.  The market erased its gains and sold off to a low of $52.27 by mid-morning.  The market later retraced some of its losses and settled in sideways trading range during the remainder of the session. February WTI settled down 64 cents at $52.37, while March Brent settled down 56 cents at $55.45.  Meanwhile, the product markets were mixed, with the heating oil market settling down 2.42 cents at $1.6514 and the RBOB market settling up 9 points at $1.6117. 

Fundamental News:
  OPEC Secretary-General, Mohammed Barkindo, said he was confident oil producers would observe an agreement under which OPEC and non-OPEC producers have agreed to lower their oil output in order to support prices.  He stated that oil price volatility is here to stay. 

The Executive Director of the IEA, Fatih Birol, said shale output is set to increase if crude prices remain at $55-$60/barrel. 

Baker Hughes reported that the number of rigs drilling for oil in the US fell by 7 to 522 in the week ending January 13th. 

Oil Movements reported that Middle East shipments will fall by 480,000 bpd to 17.36 million bpd in the four weeks ending January 28th.  Total OPEC shipments will fall by 110,000 bpd to 24.14 million bpd compared with the period ending December 31st. 

Venezuela's PDVSA projects oil production will remain near 23-year lows in 2017.  PDVSA saw production fall by nearly 10% in 2016 due to an unraveling economy and low oil prices.  This year, PDVSA sees production at 2.501 million bpd, an increase of 5,000 from 2.496 million bpd for the first 11 months of the year. 

Iraq's OPEC Governor, Falah Al-Amri, said the country plans to cut its southern oil exports to 3.1-3.15 million bpd in January from 3.51 million bpd in December.  He said Iraq's oil exports stand at 3.077 million bpd.   

Tanker tracking for the first 11 days of January shows Iraqi crude exports down about 350,000 bpd from the average December level.  However, tankers are still loading in line with the program, which has the highest flow since October 2015. 

Kazakhstan may not be able to extend its commitment to helping OPEC cut global oil supply into the second half because its new field will increase its production.  The Kashagan field, which started exporting in October, is set to produce 370,000 bpd by the end of the year.  It is 190,000 bpd more than the government forecast last month.

British Colombia's decision to allow Kinder Morgan to triple the capacity of its Trans Mountain Pipeline will allow more crude from Canada's oil sands to reach Asia.  It will increase its capacity to 890,000 bpd from the current 300,000 bpd. 

The EPA announced a final determination that it would keep future targets calling for auto-makers to sell light vehicles averaging 54.5 miles per gallon or 40 mpg in real-world driving, by 2025.  The final decision faces intense resistance from auto companies, who are expected to lobby President-elect Donald Trump's administration for some relief from Friday's decision.


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.28, down 9 cents

RBOB - Feb $1.6121, up 4 points

HO - Feb $1.6522, up 8 points 


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Oil prices peaked after reports of 2 year output lows for Russian and Saudi Arabian oil

January 13, 2017

Recap: Oil prices peaked in overnight trading on reports of cuts in both Russian and Saudi Arabian oil output, which fell to its lowest level in almost 2 years. The ascent took February WTI to a morning high of $53.50, for a gain of $1.25, or 2.4%. March Brent reached a high of $56.43, up 2.4%, or $1.33 cents. The day's range was established before 10 o'clock in the morning, as both blends settled into a sideways trading pattern for the remainder of the day. February WTI settled at $53.01 a barrel, up 76 cents, or 1.45%, while Brent for March delivery posted a 91 cent, or 1.65% gain, to settle at $56.01 a barrel.

February RBOB gained 1.8 cents, or 1.1%, to $1.611 a gallon, while February heating oil tacked on 2.3 cents, or 1.4%, to $1.676 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending January 10th, fell by 529,986 barrels on the week.  Stocks fell by 133,554 barrels from Friday, January 6th. 

Saudi Arabia's Oil Minister, Khalid al-Falih, said the country has cut its crude oil production to below 10 million bpd.  He said his country would cut production even further in February.  OPEC decided to cut its output by 1.2 million bpd collectively after almost two years of pumping flat out in a fight for market share.  Saudi Arabia's share of that cut was 486,000 bpd, which would have brought its output to 10.058 million bpd.  He said that the OPEC and non-OPEC deal is for six months and will consider later whether to renew it.  He added that the OPEC deal will accelerate the rebalancing of the global oil market and that prices would respond later this year.  Saudi Arabia's Oil Minister also stated that demand for oil would continue to increase in 2017 and that markets will tighten in two to three years due to project delays. 

Iraq's Oil Minister, Jabar Ali al-Luaibi, said Iraq wants to see prices at around $65/barrel.  He said Iraq has cut its exports by 170,000 bpd and is expected to cut exports further by 40,000 bpd this week.  Separately, Iraq's Oil Minister said he hopes to consider a new round of oilfield tenders before the end of the year.  

Kuwait's Oil Minister, Essam Al-Marzouq, said the country has cut its output by more than the amount to which it committed in the OPEC agreement.  He said Kuwait has cut its oil exports by more than 133,000 bpd mainly to customers in North America and Europe while maintaining full exports to Asia.  Separately, he stated that the current oil price level is encouraging oil investments to come back.  

Russia's Energy Minister, Alexander Novak, said Russia has started cutting its oil production in line with the OPEC agreement.  Russian oil condensate production averaged 11.095 million bpd in the first 11 days of January compared with 11.21 million bpd in December. 

Kazakhstan's government said the country will increase its crude production this year while still meeting its obligations under the OPEC agreement. 

The director general of oil and gas marketing at Oman's Ministry of Oil, Ali Al-Riyami, said Oman has set its oil output limit at 970,094 bpd and set levels for individual companies. 

The UAE's Energy Minister, Suhail al-Mazrouei, said the progress made by OPEC and non-OPEC producers towards cutting oil output by 1.8 million bpd will be assessed next week at a meeting in Vienna.  He said oil prices this month made a fair movement towards a correction and were on the right trajectory to balance the market. 


Early Market Call - as of 9:35 AM EDT

WTI - Feb $52.63 down 38 cents

RBOB - Feb $1.6103 down 5 points

HO - Feb $1.6607 down 1.09 cents


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Oil prices fell after release of EIA weekly inventory report

January 12, 2017

Recap: After spending a good part of the morning trading within a 24 cent range, oil prices subsequently fell upon the EIA weekly inventory report indicating a 4.1 million barrel draw in U.S. crude oil inventories. February WTI quickly fell to a low of $50.75, for a drop of 1.8% on the day. Following a press conference by US President-elect Donald Trump, traders reacted by selling the dollar, which in turn propped up dollar denominated commodities. Oil prices surged 4%, with February WTI hitting its session high, set at $52.78. This spot contract finished the session at $52.25 a barrel up $1.43, or 2.8%. March Brent gained $1.46, 2.7%, to settle at $55.10.

February gasoline gained 4.1 cents, or 2.5%, to $1.652 a gallon, while February heating rose 4.6 cents, or 3%, to $1.593 a gallon.

Fundamental News:  On Wednesday, the UAE Energy Minister said it would be premature to decide whether the production agreement between OPEC and non-OPEC needs to be extended beyond six months. The oil minister also said his country had spoken to all of its customers about supply cuts and is now implementing those cuts. He noted that the UAE is "committed" to the production cuts. He expected the impact of the recent cuts made by OPEC and non-OPEC producers earlier this month will be felt by the middle of this year. He said he also expected growth in demand for oil would continue this year.

Reuters reported that Saudi Aramco has notified Indian refiners Reliance and Hindustan Mittal Energy that it was cutting contractual volumes by 20% from its contract volume. In addition, Reuters reported that Saudi Arabia has also cut February term crude supplies to Southeastern Asian customers as well for the second month in a row.

Genscape reported that crude oil inventories in the ARA region rose by 1.78 million barrels in the week ending January 6th to 55.76 million barrels. 

The head of the oil industry and markets division of the IEA said oil producers probably want to see a $50 per barrel floor price, but probably do not want prices to go much above $50 a barrel to avoid encouraging new production, resulting in a glut.

A Nigerian oil labour union has begun a nationwide strike against petrol stations, oil tankers and seven crude oil flow stations. The union said the strike would last for three days and involves 10,000 workers. The union also noted later in the day that the seven flow stations in and around the town of Oleh in the southern Niger Delta oil hub, still remains shut.

Reuters reported that over 11 million barrels of North Sea Forties crude have been offloaded or are on their way to Asia, as well as 11 million barrels of Azerbaijan crude, as Asian buyers seek to offset the recent announced supply cuts by OPEC.

Platts reported that its survey of OPEC and industry officials showed that oil production by OPEC in December fell by 280,000 b/d, due to declines in Nigeria and Saudi Arabia.

This morning's EIA Weekly Petroleum Status Report reported that refinery utilization on the Gulf Coast reached a seasonal all time high level of 96.4%.

Colonial Pipeline said late Tuesday that it was looking to restart its gasoline line between Atlanta and Nashville by the end of this week after it was shut this past Saturday following a leak. The company also said Wednesday that it was allocating space for Cycle 5 shipments on Line 1 for gasoline and on Line 2, its main distillate line.


Early Market Call - as of 9:00 AM EDT

WTI - Feb $53.33, up $1.08

RBOB - Feb $1.6205, up 2.77 cents

HO - Feb $1.6791, up 2.67 cents 


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Oil prices declined as the dollar continued to gain

January 11, 2017

Recap: Oil prices continued to decline as the dollar gained and optimism over output cuts began to wane. February WTI fell to its lowest level in 5 weeks, slipping $1.14, or 2.19%, to settle at $50.82 a barrel. Brent for March delivery settled at $53.64 a barrel, down $1.30, or 2.37%.

Back in November we made mention of the Dec17/Dec18 WTI spread, which traded in backwardation for the first time since 2014. The breakout point for this spread was -$1.00. Today, it settled back in contango market conditions, having finished at -$0.37. With OPEC and non-OPEC producers agreeing to cut back on output for the first six-months of 2017 this spread could very easily rebound, as such cuts will leave a shortfall going forward. Adding pressure to the deferred contract is a report by the U.S. Energy Information Administration calling for an end to the nearly two-year stretch of overall declining U.S. oil production. The EIA has forecasted production will rise year-on-year for 2018. Based on this, we would look to buy the Dec17, sell the Dec18 WTI down around the aforementioned breakout point of -$1.00.

February RBOB fell 2.4 cents, or 1.5%, to settle at $1.547 a gallon, while February heating oil fell 2.6 cents, or 1.6%, to settle at $1.611 a gallon.

Fundamental News: The EIA, in its Short Term Energy Outlook, raised its 2017 world oil demand growth forecast by 70,000 bpd from its previous estimate to 1.63 million bpd.  It said world oil demand in 2018 is expected to reach 98.71 million bpd, up 1.51 million bpd from 2017.  OPEC's oil production increased by 330,000 bpd to 33.22 million bpd in 2017 and by 510,000 bpd to 33.73 million bpd in 2018.  Meanwhile, US oil demand for 2017 is forecast to increase by 260,000 bpd compared with 240,000 bpd growth forecast previously.  US oil demand for 2018 is set to increase by 370,000 bpd to 20.22 million bpd.

Kuwait's Oil Minister, Essam Al-Marzouk, said OPEC and its partners will fulfill their implementation of a deal to cut output. 

Saudi Aramco notified some Asian customers that they will get less crude in February.  It was exploring cuts of 3-7% in February crude loadings.  In January, Saudi Aramco mainly cut supplies to customers in Europe and the US. 

Russia has reduced its output by 130,000 bpd in the first few days of January, about a third of the way towards the total cut Russia promised to deliver by mid-2017.  The reduction is not the result of its desire to comply with the agreement but the cold temperatures in Siberia that have forced work at oil rigs to come to a halt.  Late last month and in early January, temperatures fell as low as minus 60 degrees Celsius or minus 76 degrees Fahrenheit across Siberia.  The cold weather has also prevented maintenance and repair work at oilfields and the drilling of new wells.

Kremlin spokesman, Dmitry Peskov, said Russia is fulfilling all of its obligations under a deal between OPEC and non-OPEC exporters to cut output.  

Senior energy officials stated that Iraq will likely pursue scheduled field maintenance to temporarily reduce oil production to meet obligations of the OPEC and non-OPEC agreement.  Separately, Iraq's Oil Ministry reported that the country has cut production by 160,000 bpd since the beginning of January in line with an OPEC decision to cut output.  Iraq's Oil Minister, Jabar Ali al-Luaibi, said he hoped that by the end of the month production would be cut by 210,000 bpd.   

Nigerian oil workers have started strike action at its Oleh crude flow station in Delta State.  They started a strike in protest over non-payment.  Separately, Nigeria's blue-collar oil union plans a three day strike at fuel depots run by local units of Chevron and Exxon Mobil to protest job cuts.  The strike will begin on January 11th ahead of talks on the same day between union leaders, oil company executives and the government.  


Early Market Call - as of 9:50 AM EDT

WTI - Feb $51.41, up 60 cents

RBOB - Feb $1.5766, up 2.99 cents

HO - Feb $1.6346, up 2.32 cents


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Oil fell to its lowest level in three weeks

January 10, 2017

Recap: Oil fell to its lowest level in 3 weeks, as traders responded to the 10th straight week of increases in active U.S. rig counts. This combined with concerns over rising Iraqi oil exports pushed oil prices as low at 4% on the day. After falling to a low of $51.78, February WTI pared losses, to settle at $51.96 a barrel, down $2.03, or 3.76%. Brent for March delivery slipped $2.16, or 3.78%, settling at $54.94 a barrel.

February RBOB fell by 6.3 cents, or 3.9%, to $1.571 a gallon, while February heating oil settled at $1.638 a gallon, down 6.6 cents, or 3.9%.

Fundamental News:  Genscape reported that crude oil inventories in Cushing, Oklahoma fell by 783,866 barrels in the week ending January 6th.

A Department of Energy official said the US government plans to sell up to 8 million barrels of light, sweet crude from three of the SPR's four sites later in January, with first deliveries planned for as early as February. 

Kuwait's Governor to OPEC, Nawal Al-Fezaia, said oil producers from Saudi Arabia to the UAE are complying with production cuts promised last year to stabilize the market.  He said Qatar, Oman and Kuwait are also complying.  Separately, Kuwait's Oil Minister, Essam Al-Marzouq, said he expected a big commitment by OPEC and non-OPEC producers to the global oil supply cut deal reached late last year.  He also stated that a committee meeting in Vienna on January 21st and 22nd to monitor compliance with the agreement will agree on a final monitoring mechanism.

Russia cut its oil production in early January by about 100,000 bpd from the previous month.  Russia's oil and gas condensate output averaged 11.1 million bpd in the period from January 1 to January 8.  This is down from 11.21 million bpd in December and October's level of 11.247 million bpd.   

National Iranian Oil Co said Iran is producing 3.9-4 million bpd of crude oil.   

Iraq's Oil Ministry reported that oil exports from Iraq's southern Basra ports reached a record high of 3.51 million bpd in December.  However, Iraq's Oil Minister, Jabar Ali al-Luaibi, said the unprecedentedly high exports from the south would not affect Iraq's decision to lower production in January in line with OPEC's agreement.  Iraq said it would cut output by 200,000 bpd to 4.351 million bpd. 

Separately, Iraq has given full supply allocations of Basra crude to three refiners in Asia and Europe for February. 

Kuwait has shut all ports on Monday temporarily due to bad weather conditions.  Bad weather halted operations at Kuwait's Shuwikh, Shuaiba and Doha ports, which are expected to resume activity once weather conditions and visibility improve. 

Shell's 180,000 bpd Trans Niger Oil Pipeline in Nigeria is operating again.  The pipeline was restarted on January 8th after it was shut in on January 3rd following a fire.

Libya's United Nations-backed government will declare force majeure on two ports to stop fuel smuggling from them.  A statement from its presidential council gave no details on when the measure would come into effect but it comes after officials accused a local armed group of fuel smuggling from Zawiya port. 

Colonial Pipeline Co's Line 19, a gasoline line between Atlanta, Georgia and Nashville, Tennessee, remained shut on Monday as the company looked for the source of a small leak in Chattanooga.  Colonial Pipeline reported to the US National Response Center that the leak released about 15 barrels of gasoline.  The line was shut on Saturday after the smell of gasoline was reported to the fire department.  Colonial said Line 20 is operating normally.   


Early Market Call - as of 9:00 AM EDT

WTI - Feb $51.97, up 1 cent

RBOB - Feb $1.5771, up 64 points

HO - Feb $1.6391, up 13 points 


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Crude oil prices traded in and out of positive territory

January 09, 2017

Recap: Crude prices traded in and out of positive territory as traders weighed the prospects for lower production levels against the increase in product stocks reported by the EIA on Thursday.  The market was supported early in the morning amid reports that Saudi Arabia is expected to fully comply with its agreed output cut of 486,000 bpd while Kuwait has also reduced its output in line with the deal.  Also, Royal Dutch Shell reported that it shut in its 140,000 bpd Trans-Niger Bonny Light Pipeline.  The market traded to a high of $54.32 before it sold off on news that Iran sold more than 13 million barrels of oil it held in floating storage as it capitalizes on it being exempt from the OPEC agreement to cut supply.  The market was also pressured amid the gains in the dollar.  The market sold off to a low of $53.32.  In choppy trading, the market bounced off that level and traded back towards its earlier high by mid-day before it once again traded lower ahead of the weekend. WTI crude settled up 23 cents at $53.99 while Brent crude settled up 21 cents at $57.10/barrel.  Meanwhile, the heating oil market settled up 90 points at $1.7032 and the RBOB market settled down 37 points at $1.6340.

Fundamental News:  According to industry sources, Iran sold more than 13 million barrels of oil that it has held on tankers at sea, capitalizing on the OPEC deal from which it is exempt from.  In the past three months, Iran sold almost half the oil it had held in floating storage, which had tied up many of its tankers as it struggled to offload stocks in an oversupplied global market.  Iranian oil held at sea fell to 16.4 million barrels from 29.6 million barrels at the beginning of October, according to the Thomson Reuters Oil Flow data.  Unsold oil is now tying up about 12 to 14 Iranian tankers, out of its fleet of about 60 vessels, compared with about 30 in the summer.

According to a person familiar with Saudi policy, Saudi Arabia is expected to fully comply with OPEC production cut figures.  Saudi Arabia is going for full compliance so other countries do the same.  Under the agreement, Saudi Arabia is expected to cut production by 486,000 bpd to 10.058 million bpd starting January 1st.   

Bloomberg reported that Saudi Arabia is attempting to maintain its market share by continuing to pump the type of crude that is similar to US and African supply, while fulfilling its promise to cut output by focusing cuts on other varieties.  The country plans to shut some fields producing the Arab Medium and Arab Heavy grades to meet its output reduction target. 

A Kuwaiti oil official said Kuwait has reduced oil production in January to about 2.707 million bpd, meeting its output target under an OPEC supply cut agreement.  Separately, a source said Kuwait is expected to make a larger oil output cut than required by OPEC.

According to Energy Aspects, Iraq is the most likely culprit to cheat on OPEC's output agreement. 

Royal Dutch Shell shut in the 140,000 bpd Trans Niger Bonny Light Pipeline.  The company cited a fire as the reason for the shutdown. 

Baker Hughes reported that US oil drillers increased the number of rigs searching for oil by 4 to 529 in the week ending January 6th.  The number of oil rigs increased for the tenth consecutive week to the highest level since December 2015. 

Oil Movements reported that OPEC shipments will fall by 180,000 bpd to 24.17 million bpd in the four weeks ending January 21st compared with the previous four week period ending December 24th. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.84, down $1.15

RBOB - Feb $1.5985, down 3.58 cents

HO - Feb $1.6710, down 3.24 cents


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Oil prices fell after increase of US distillate and gasoline inventories

January 06, 2017

Recap: Oil prices bounced around throughout the session, initially falling on the larger than expected increase in both U.S. distillate and gasoline inventories. The 8.3 million barrel increase in gasoline stocks, combined with the 10.1 million barrel build in distillate stocks negated the surprise 7.1 million barrel increase in crude oil stocks, pushing oil prices below unchanged on the day. Reports that Saudi Arabia was informing customers about the possibility of cuts of up to 7% in crude oil sales halted the slide in prices. Oil futures gained traction, slicing losses by up to 1.8%. February WTI settled at $53.76 a barrel, up 50 cents, or 0.94%. Brent for March delivery tacked on 43 cents, or 0.76%, to settle at $56.89 a barrel.

February RBOB fell less than a cent, or 0.5%, to $1.638 a gallon, while February heating oil ended close to unchanged at $1.694 a gallon.

Fundamental News:  Genscape reported crude stocks held in Cushing, Oklahoma in the week ending December 30th fell by 387,435 barrels.

Saudi Aramco has started talks with customers to discuss possible cuts of 3% to 7% in February crude loadings to comply with OPEC's production cuts.  Under the deal, Saudi Arabia agreed to cut output by 486,000 bpd or 4.61% of its October output of 10.544 million bpd.  The sources said Saudi Aramco is approaching all its customers for possible cuts from February and discussing likely supply scenarios. 

Saudi Arabia's Energy Minister, Khalid Al-Falih, said crude is set to recover as OPEC fulfills its agreement.  He said the intervention is intended to "nudge along" a re-balancing of the oil market, as prices will need to increase to encourage investment in new supplies.  He said crude will balance between $50 and $100/barrel. 

Iraq's Oil Minister, Jabar Ali al-Luaibi, said the country has started implementing measures to cut its oil output in compliance with the OPEC agreement.  Iraq agreed to cut output by 200,000 bpd to 4.351 million bpd. 

OPEC's oil output in December fell from a record high ahead of a deal to cut production, according to a Reuters survey.  Supply from OPEC in December fell to 34.18 million bpd from a revised 34.38 million bpd in November.  In December, the largest decline came from Nigeria.  No Forcados crude was exported following an attack on a pipeline and shipments of the Agbami stream fell, most likely due to planned maintenance work.  Saudi Arabia's production fell to 10.45 million bpd in December from 10.6 million bpd in November.   

Goldman Sachs expects Brent oil prices to peak at $59/barrel in mid-2017.  It said high oil demand and higher than expected compliance with OPEC's output cut deal could lead to normalization of inventories by next summer.  However, it said it expected US shale oil producers to continue to increase activity at current price levels. 

Barclays said oil price risk is skewed to the upside on lower inventory.  It said tightening oil inventories would likely exacerbate how the market prices supply risks in 2017, even if no physical supply disruption occurs. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp hub in the week ending January 5th increased by 7.29% on the week and by 25.88% on the year to 1.104 million tons.  Gasoil stocks increased by 4.57% on the week but fell by 23.14% on the year to 2.701 million tons. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $54.16, up 41 cents

RBOB - Feb $1.6450, up 73 points

HO - Feb $1.7042, up 1.01 cents 


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Oil futures traded in a narrow range on lighter than normal volume

January 05, 2017

Recap: Oil futures traded in a narrow range on lighter than the normal volume, with initial movement to the downside. The inability of the February WTI contract to reach its 30-day moving average of $51.93, combined with anticipation of a decrease in U.S. crude oil inventories sparked a rise in prices, putting the February WTI within sight of $53.31, the 10 day moving average. February WTI rose 93 cents, or 1.8%, to settle at $53.26 a barrel, while March Brent added 99 cents, or 1.8%, to $56.46 a barrel. 

In the near term, expectations are for oil prices to remain within a tight range, as traders weigh in on a couple of key factors. Among these factors is the adherence by OPEC and non-OPEC members to the proposed production cuts, which historically have proven unable to do so. Secondly, is the desire of U.S. producers to take advantage of higher prices, thereby ramping up production. Focus will be on the weekly inventory reports put out by the Energy Information Administration.

February RBOB gained 2.4 cents, or 1.5%, to $1.646 a gallon, while February heating oil tacked on 1.6 cents, or 1%, to $1.693 per gallon.

Fundamental News: Kuwait Petroleum Corp is committed to an oil output cut agreed by OPEC.  It notified its clients of the production cuts from the beginning of January, saying they will be in effect for the entire first quarter of 2017.  Under the agreement, Kuwait would cut its production by 131,000 bpd.

Libya is reopening its last major oil export terminal that was shut amid the conflict in the country.  An official at Libya's National Oil Corp said the Zawiya terminal is preparing to resume exports after the pipeline supplying it was reopened.  With Zawiya reopened, all nine of Libya's main oil ports would be exporting crude.  The NOC official said Libya is currently producing 700,000 bpd of oil, up from 580,000 bpd in November and 520,000 bpd in October.

Bloomberg reported that preliminary US waterborne crude imports fell by 1.77 million bpd to 3.37 million bpd in the week ending December 29th.  The Gulf Coast saw the largest decline of 886,700 bpd, with imports in the West and East Coast falling by 425,700 bpd and 453,700 bpd, respectively.  Total crude and product imports fell by 1.57 million bpd to 5.065 million bpd. 

According to Bloomberg, crude stocks at Cushing, Oklahoma increased by 900,000 bpd in the week ending December 30th. 

IIR reported that US oil refiners are expected to have 104,000 bpd of capacity offline in the week ending January 6th, reducing available refining capacity by 26,000 bpd from the previous week.  IIR expects offline capacity to increase to 573,000 bpd in the week ending January 13th. 

Alberta Energy Regulator data showed that a total of 310 oil and gas development wells were drilled in Alberta in October, up from 226 in September and the most in 2016. 

Bernstein analysts stated that the oil inventory overhang is expected to be reduced by a third in the first half on cuts.  It said that while compliance with the 1.8 million bpd cut will not be perfect, it should be sufficient to significantly deplete the inventory overhang, which is limiting an increase in prices.


Early Market Call - as of 9:50 AM EDT

WTI - Feb $53.82 up 56 cents

RBOB - Feb $1.6480 up 21 points

HO - Feb $1,6760 up 30 points


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February WTI hits high after Kuwait and Oman begin to cut output

January 04, 2017

Recap: February WTI rose to a high of $55.24 after Kuwait and Oman announced they had already begun to operate under the agreed upon cuts, which were to begin on Jan 1. After achieving this new 18-month high, oil prices fell as the dollar experienced its largest gain in more than two weeks. Strength in the dollar combined with a Genscape report announcing a build of 1,038,251 barrels of crude at Cushing, OK, pulled the rug right out from under the rally. WTI slipped to a low of $52.11, down $1.61 on the day. Gains were pared in late session trading, with February WTI settling at $52.33 a barrel, down $1.39, or 2.59%. Brent for February delivery fell $1.35, or 2.38%, to settle at $55.47.

February RBOB fell 4.9 cents, or 2.9%, to $1.622 a gallon, while February heating oil finished at $1.677 a gallon, down 5.2 cents, or 3%.

Fundamental News:  Genscape reported that crude oil inventories built by 1,038,251 barrels in the week ending December 30th. 

January 1st marked the official start of a deal agreed by OPEC and other non-OPEC producers, such as Russia, to cut output by almost 1.8 million bpd. 

An official at Libya's National Oil Corp said the country increased its production to 685,000 bpd from about 600,000 bpd in December.  Output increased after a two-year blockade was lifted two weeks ago on major pipelines leading from the western fields of Sharara and El Feel.  

Officials from Oman and Kuwait told local media that they are cutting oil production in January, fulfilling pledges made on December 10th.  Oman told customers that it would cut its crude oil term allocation volumes by 5% in November.  Oman is cutting production by 45,000 bpd from 1.01 million bpd, according to the Oil Ministry's Director of Marketing, Ali Al-Riyami.  Meanwhile, Kuwait Oil Co CEO, Jamal Jaafer, said Kuwait has reduced its output by 130,000 bpd to about 2.75 million bpd.   

Russia's oil production in December remained unchanged at 11.21 million bpd, near a 30-year high. The country is preparing to cut output by 300,000 bpd during the first half of 2017.  In 2016, Russia's total output reached 10.96 million bpd, up from 10.72 million bpd in 2015.      

JBC Energy stated that total OPEC crude production in December will be largely unchanged month on month at about 34.5 million bpd.

Iraq's Prime Minister, Haider al-Abadi, said the Kurdish region was exporting more than its allocated share of oil as the country seeks to comply with an OPEC output cut.  Kurdish regional authorities have yet to publish oil export figures for December, but the Ministry of Natural Resources said it had pumped an average of 587,646 bpd to Turkey's Ceyhan port in November. 

The Louisiana Offshore Oil Port awarded 700 barrels of February crude storage for 74 cents/barrel on Tuesday, during the terminal's monthly auction. March cavern space totaling 500 barrels was awarded at 76 cents/month.  Physical forward agreements for the second quarter at 500 barrels per month were awarded for 33 cents per barrel per month. 

The ISM's US Manufacturing Activity Index in December increased to 54.7 from 53.2 in November.  The Prices Paid Index increased to 65.5 in December from 54.5 in November while the New Orders Index increased to 60.2 in December from 53 in November.


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.35, up 2 cents

RBOB - Feb $1.6262, up 44 points

HO - Feb $1.6697, down 70 points 


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Oil prices dropped after EIA reported a surprise build in US crude oil inventories

December 30, 2016

Recap: Oil prices retreated from 18-month highs on Thursday, after the EIA reported a surprise build in U.S. crude oil inventories. According to the report, stockpiles increased by 614,000 barrels, expectations were calling for a decrease of 2.1 million barrels.

February WTI was trading at $54.21, the high of the day, prior to the release of the number, but quickly drifted 0.84%. A brief pop took this spot contract back above $54 a barrel, but strength was not sustainable. Resumption to the downside shaved an additional 16 cents off of the previous low, and kept February futures below $54.  WTI settled at $53.77 a barrel, down 29 cents, or 0.54%, while February Brent slipped 8 cents, or 0.14%, to settle at $56.14 a barrel. Volume on both side of the Atlantic was light.

January RBOB rose 0.44% to $1.6820 a gallon, while January heating oil gained 0.25%, to settle at $1.7034 a gallon.

Fundamental News:  According to cFlow, Platts trade flow software, US Gulf Coast distillate flows to Europe and North Africa for December arrival is 1.02 million tons to date, which compares with a total of 1.04 million metric tons in November.  A total of 10 new fixtures appeared on the trans-Atlantic route since its previous estimate, bringing the number of vessels to discharge in December to 23.

Colonial Pipeline Co is allocating space for Cycle 2 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee. 

Russia has suspended oil loadings at the Black Sea port of Novorossiisk on Thursday due to a storm.  The storm is expected to subside on Saturday.

Gasoline stocks in independently-held storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending December 29th increased by 2.18% on the week and by 28.14% on the year to 1.029 million tons.  Gasoil stocks increased by 1.61% on the week but fell by 21.92% on the year to 2.583 million tons while fuel oil stocks fell by 4.26% on the week and by 41.91% on the  year to 675,000 tons.  Naphtha stocks increased by 17.22% on the week and by 20.1% on the year to 245,000 tons while jet fuel stocks fell by 7.11% on the week but fell by 24.31% on the year to 601,000 tons. 

China has cut oil product export quotas to the country's four majors by 40% in the first round of licenses for 2017.  In a notice dated December 23rd, the Ministry of Commerce and the General Administration of Customs said the four state majors will be allowed to sell 12.4 million tons of gasoline, gasoil and jet fuel abroad next year. It is down from 20.54 million tons in the same round this year.

While US Gulf Coast refiners are planning refinery maintenance in 2017, they are facing a labor shortage that could delay work, increase costs and raise accident risks.  Fuel producers such as Marathon Petroleum Corp and Valero Energy Corp have delayed work during the past 2 years amid high margins.  The margins have declined this year, providing an incentive for refiners to undertake the shutdowns necessary for repairs.  However, refiners are competing for pipe fitters and ironworkers with a host of billion dollar energy projects.  Without undertaking the work they need, refineries run the risk of more unscheduled outages at the plants.  US refiners are expected to spend $1.26 billion on planned maintenance next year, up 38% from this year and the highest level since at least 2010.  IIR estimates that the coast region from Brownville, Texas to New Orleans will be short about 37,400 workers needed to complete all of the planned capital projects in 2017. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $53.64, down 13 cents

RBOB - Jan $1.6675, down 1.45 cents

HO - Jan $1.7037, unchanged 


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