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Market Intel Archives

WTI spot contract traded at its highest level in 18 months

December 29, 2016

Recap: Oil prices continued to move higher, with WTI trading at its highest level for a spot contract in 18-months and for the first time in over a year, the February contract settled above $54 a barrel. Spot WTI settled at $54.06, up 16 cents, or 0.30%, while its European counterpart gained 13 cents, or 0.23%, to settle at $56.22 a barrel.

Trading remained quiet ahead of the new year, and as of 4:43 pm, February WTI traded 306,000 contracts.

While the proposed output cuts are to take effect on Jan 1, it will take some time before the market realizes any such cuts. This is once again evident in the Dec17/Dec18 WTI spread, which has been steadily moving deeper into backwardation. Prior to the proposed cuts, this spread was trading at -$2.00, and is currently trading at 76 cents premium to the Dec17.

January RBOB rose 2.18 cents, or 1.3%, to finish at $1.6746 a gallon, the highest since Aug. 14, 2015. January heating oil settled at $1.6993, down .0001.

Fundamental News:   Iraq's Oil Minister, Jabar Ali al-Luaibi, said his country will cut supply by 200,000-210,000 bpd starting in January.  He also stated that he saw oil prices rising to $60/barrel as the cuts would help ease the global oversupply of the past three years. 

Iran's Oil Minister, Bijan Zanganeh, said he expects OPEC to abide by the deal to cut production. 

Kuwait's Oil Minister, Essam Al-Marzouq, said preparations are underway to hold the first meeting of the committee responsible for monitoring compliance of the OPEC deal in Vienna on January 21-22.  In addition to Kuwait, which heads the committee, members include Algeria, Venezuela, Russia and Oman. 

Russian Finance Minister, Anton Siluanov, said a price of $45/barrel of oil was balanced for both suppliers and consumers.  He stated that budget revenues from oil and gas sales had fallen by 18% this year due to weaker prices. 

US oil and gas companies are seeing their credit limits expand for the first time in two years as improving oil prices increase the value of their reserves against which banks lend.  Oil and gas companies that have so far announced the results of a biannual revision of borrowing limits, report an average increase of about 5% in credit lines or more than $1.3 billion.  The combined bank credit for the companies stood at $30.3 billion, compared with $28.9 billion at the end of spring 2016.  US shale drillers are set to increase spending on exploration and production next year.  While the credit increase is small, US-based shale drillers are looking to increase their market share to take advantage of higher prices and greater availability of capital will make that easier. 

Egypt's Oil Minister, Tarek El Molla, signed three offshore oil and gas exploration and production deals worth a total of $220 million with France's Total, Britain's BP and Italy's Eni's Egyptian subsidiary IEOC.  The deals include drilling for six wells and a signing bonus of $9 million. 

Russia's Transneft said oil loadings from the Russian Pacific port of Kozmino have been suspended due to a storm.  It said weather conditions are expected to improve later on Wednesday.

Imports of crude oil by Iran's four major buyers in Asia in November more than doubled for a second consecutive month from a year ago.  China, India, South Korea and Japan imported 1.94 million bpd in November, up 117% on the year. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $54.90, down 5 cents

RBOB - Jan $1.6990, up 2.44 cents

HO - Jan $1.7093, up 1 cent


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Oil prices continued to climb as the commencement of OPEC deal to cut supplies starts Sunday

December 28, 2016

Recap:  With the commencement of the OPEC/non-OPEC deal to cut supplies due to begin on Sunday, oil prices continued to climb as we approach year's end. February WTI rose just over 2%, as it closes in on $54.51, this year's high thus far, and Brent for February delivery rose equally as much. Volume was light as traders look to square their books ahead of the new year. Tuesday's settlement of $53.90 in February WTI is the highest settlement for a spot contract for 2016. This was up 88 cents, or 1.66% from Friday's close. February Brent tacked on 93 cents, or 1.69%, to settle at $56.09.

January RBOB rose 2.66 cents, or 1.6%, to finish at $1.6528 a gallon, while January heating oil rose 3.66 cents, or 2.2%, to end at $1.6994 a gallon, the highest close since July 2015.

Fundamental News:   Venezuela said it will cut 95,000 bpd of oil production in the New Year in line with OPEC's agreement to cut production.  According to ministry data, Venezuela currently produces just over 2.4 million bpd of crude and condensate.  Venezuela's President Nicolas Maduro stated that he will soon embark on a tour of oil producing countries to support the OPEC deal.

Mexico's Finance Ministry said local gasoline prices will increase by as much as 20.1% starting January 1st as part of a fuel sector liberalization program that seeks to end years of government set pump prices.  It said the Magna gasoline brand will increase by 14.2% and will set an average price of 15.99 pesos per liter at retail while the premium fuel will increase by 20.1% to an average of 17.79 pesos per liter.  Diesel prices will increase by 16.5%, with an average price of 17.05 pesos per liter. 

Colonial Pipeline is allocating space for Cycle 1 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.  Colonial Pipeline is also allocating Cycle 2 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Trade sources stated that the diesel margin in Asia increased to a nearly one-week high on Tuesday as stocks of the fuel were depleted in China.  China's diesel inventories fell to a record low at the end of November, falling 3.9% on the year to 5.95 million tons. 

Russia's Gazprom Neft plans to increase its oil production by 4.5-5% next year, less than it had intended before Russia joined a deal with OPEC to cut production.  It stated that it is expected to produce 85.8 million tons of hydrocarbons in 2016 and that its net profit will increase significantly this year. 

IIR reported that US oil refiners are expected to shut in 61,000 bpd of capacity in the week ending December 30th, increasing available refining capacity by 199,000 bpd from the previous week.  IIR expects offline capacity to increase to 64,000 bpd in the week ending January 6th.

The weekly US oil inventory data will be released a day later than usual for the next two weeks due to the Christmas and New Year holidays.  The API report will be published on Wednesday of this week and next, while the EIA report will be released at 11 am ET Thursday of this week and next. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $54.11, up 21 cents

RBOB - Jan $1.6675, up 1.47 cents

HO - Jan $1.7072, up 76 points 


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Oil futures hit lowest level of the week after report of increase of U.S. crude stocks

December 23, 2016

Recap:  Wednesday's report of a 2.3 million barrel increase in U.S. crude stocks added pressure to oil futures at the start of Thursday's session, pushing both blends to their lowest level of the week. Prices began to rise along with the sun, erasing early losses, and taking both WTI and Brent above unchanged. Weakness in the dollar and growth in the U.S. economy were behind the day's strength. According to the U.S. Commerce Department, the gross domestic product increased at a 3.5% annual rate, as opposed to the expected 3.2% rate. However, the restart of Libya's oil flow through 2 major fields worked to keep a cap on prices. Volume was light ahead of the Christmas/Chanukah Holidays. February WTI gained 46 cents, or 0.88%, to settle at $52.95, while February Brent added 59 cents, or 1.08%, settling at $55.05. 

February WTI is caught between support at $52.10 and near term resistance set at $54.40. A break to the downside allows for a run at $51.80. To the upside, a push through $54.40 allows for a run at $56.24.

January RBOB finished at $1.6040 a gallon, less than 0.1% lower, or 0.2 cent. Meanwhile, January heating oil gained almost 2 cents, or 1.3%, to finish at $1.6608 a gallon.

Fundamental News:   Iraq said most international oil companies working in the country, along with the country's semi-autonomous Kurds, have agreed to cut crude output to fulfill an OPEC agreement.  Iraq's Oil Minister, Jabbar al-Luaibi, said the country is committed on delivering on OPEC's November 30th agreement to cut supplies.  Iraq pledged to cut production by 210,000 bpd or 4.5% of its total production. 

Saudi Arabia's Energy Minister, Khalid Al Falih said he was optimistic that 2017 will witness a recovery in the global economy and oil prices.  He also stated that the country was proceeding with its development projects regardless of oil prices.   

The UAE's Oil Minister, Suhail Al Mazrouei, said oil prices may increase even more once investors see that OPEC and other major producers are fulfilling an agreement to cut production to cut the global oversupply. He said OPEC is committed to the decision to cut output but added that it was too early to talk about any additional steps it may take.

Kuwait's Oil Minister, Essam Abdul Mohsen Al Marzouq, said an OPEC committee responsible for monitoring compliance with a global agreement to reduce oil output will meet in the first half of January. 

Russia's Energy Minister, Alexander Novak, said the country's oil exports could increase by 4.8% to 253.5 million tons in 2016.  Oil production is expected to increase by 2.5% in 2016 to a record 547.5 million tons while oil refining will fall by 2% to 277 million tons.      

The reopening of western Libya's main oil pipelines has put the country's production targets within reach, however, an unresolved conflict and the risk of new blockades hang over potential output gains.  The pipelines from the Sharara and El Feel oilfields have reopened and the NOC says it can increase output from 600,000 bpd to 900,000 bpd by March, which could upset plans by OPEC to support global prices.  The NOC has warned that production restarts will be gradual because infrastructure across the country has bene damaged by fighting and neglect.   

Platts cFlow data showed an increase in ships carrying gasoline into the Atlantic Coast, despite the questionable arbitrage.  A total of 14 ships carrying about 4.6 million barrels of gasoline is scheduled to reach the Atlantic Coast over the next eight days.  Separately, S&P Global Platts also estimated that 940,000 metric tons of USGC distillate is en route to Europe/North Africa so far in December compared with a total of 1.04 million metric tons in November.


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.65, down 31 cents

RBOB - Jan $1.6008, down 32 points

HO - Jan $1.6621, up 13 points 


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Unexpected barrel increase in U.S. crude oil inventories pressured oil futures

December 22, 2016

Recap:  An unexpected 2.3 million barrel increase in U.S. crude oil inventories pressured oil futures; with WTI falling as much 0.7%, to a low of $52.93, while Brent slipped 0.66%, to $54.91. The 245,000 barrel draw in Cushing, OK stocks provided a floor for the markets. Prices rebounded; however, support was brief, as oil broke to the downside once again after Libya's National Oil Corporation announced that pipelines leading to Sharara and El Feel fields had reopened. Once February WTI broke below $52.90, a free fall ensued, taking this newly spot contract to a low of $52.32. Losses were slightly paired, with this spot contract settling at $52.49 a barrel, down 81 cents or 1.5%, while February Brent slipped 1.5%, or 81 cents to settle at $54.54 a barrel.

February WTI settled below the 10-day moving average which is currently set at $52.79. The previous break below this level was followed by a dip towards $51 a barrel. With moving oscillators supporting additional downside movement, we could see another test at this level.  

January RBOB rose close to 1.2 cents, or 0.8%, to settle at $1.6055 a gallon, while January heating oil lost 2.87 cents, or 1.7%, at $1.6401 a gallon.

Fundamental News:   Russia's Energy Minister, Alexander Novak, said trust between oil producing countries is needed if a global deal to cut output is to succeed.  He also stated that Russia's output of hard-to-recover oil would increase by 20% this year compared with 2015.  He said Russia's oil output in 2016 is expected to total 547.5 million tons, up 2.5% on the year.  He suggested that a meeting of a committee of OPEC and non-OPEC members to monitor the implementation of oil production cuts could take place in January. 

According to ship tracking data and a report compiled by Thomson Reuters Oil Research and Forecasts, India's oil imports from Iran fell by 19% in November to 620,000 bpd from a record high the previous month.  The decline in its imports of Iranian crude came before OPEC and other producers agreed to cut output.  Overall, India imported an average of 4.28 million bpd of crude in the January-November period of 2016, up 7.6% from 3.98 million bpd a year ago. 

China's General Administration of Customs reported that the country's diesel and gasoline exports in November rebounded from the previous month as the country's refineries processed a record amount of oil.  China exported about 365,540 bpd of diesel, up 11.7% on the month.  Gasoline shipments increased by a similar rate to about 261,630 bpd. 

Operations at Libya's southwestern Sharara oilfield were gradually resuming on Wednesday after the lifting of a two year blockade on a pipeline leading from the field.  Libya's National Oil Corporation confirmed that pipelines leading from Sharara and El Feel fields has reopened, saying it hoped to add 270,000 bpd to national production over the next three months.  An engineer at El Feel said that workers there had not received any instructions to restart operations yet.  Separately, Libya's NOC said its oil production will be 900,000 bpd at the beginning of 2017 and will reach 1.2 million bpd at the end of 2017.

Euroilstock reported that total European net refinery output in November increased by 3.2% on the month to 11.439 million bpd as seasonal refinery maintenance slowed.  It reported that European gasoline production increased by 6.7% on the month and by 6.6% on the year to 2.782 million bpd while fuel oil output increased by 1.4% on the month and 10% on the year to 1.289 million bpd and middle distillates output increased by 3.7% on the month and by 3% on the year to 5.868 million bpd. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $52.74, up 25 cents

RBOB - Jan $1.5950, down 1.05 cents

HO - Jan $1.6459, up 58 points 


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Oil futures rose on forecasts calling for a decrease in U.S. crude oil inventories

December 21, 2016

Recap: Oil futures rose to their highest level in a week on forecasts calling for a 2.4 million barrel decrease in U.S. crude oil inventories. February WTI rose as much as 1.3%, peaking the session at $53.77, while February Brent gained as much as 1.8% to a high of $55.92. Gains were pared in this thinly traded market, as the dollar rose to fresh 14-year highs. February WTI settled at $53.30, up 24 cents, or 0.45%. Brent for February delivery gained 43 cents, or 0.78%, to settle at $55.35.

February WTI continues to hold above the 10-day moving average, currently set at $52.62. This, in combination with higher highs, and lower lows, indicates underlying strength in this market. With this in mind, we could easily see the February contract retest resistance at the December high of $55.44.

January RBOB rose 2.97 cents, or 1.9%, to settle at $1.5936 a gallon, while January heating oil was little changed ending at $1.6688 a gallon.

Fundamental News: Iraq's SOMO stated in a letter to its crude oil term customers that Iraq will comply with the OPEC output cuts.  Iraq's daily crude oil exports cut will amount to 200,000-210,000 bpd during the first half of 2017.

Abu Dhabi National Oil Company has agreed to supply some refiners in Asia with more oil above contracted volumes in February.  The producer may have given additional volumes to some buyers to compensate for lower supplies of Upper Zakum crude in the past couple of months due to a logistics issue. 

Libya's National Oil Corporation said that pipelines leading from the western fields of Sharara and El Feel had been reopened after a two year blockade.  The NOC said it expects to add 175,000 bpd to national production in the next month and 270,000 bpd over the next three months.  Libya's oil production recently doubled to 600,000 bpd but remains below the more than 1.6 million bpd it was producing before its 2011 uprising. 

North Sea crude oil stored on ships has fallen by about 30% in the last week.  There are about 6.5 million barrels of North Sea crude, split between Forties, Ekofisk and Troll, currently in floating storage, down from about 9 million barrels a week ago. 

Colonial Pipeline is allocating Cycle 1 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Frontline expects strong demand for its vessels at the start of 2017 and could benefit from oil producers' pact to cut output if it forces Asian buyers to buy more oil from North and West Africa to replace the shortfall in Gulf output.  Spot rates for very large crude carriers have doubled since October to about $70,000/day, far over the level Frontline needs to earn a profit.  Its all-in break even rate for VLCCs is below $22,000. 

Norway's Statoil said Troll B platform is set to produce oil for another 8-10 years.  The platform has produced 1 billion barrels of oil equivalent since it came on stream on September 19,1995. 

BP said oil production at the Rumaila oil field in Iraq has reached over 1.45 million bpd, up from 1 million bpd in 2009.  Rumaila produced 3 billion barrels of oil since January 2010, when a joint venture between BP, PetroChina and the South Oil Co of Iraq began operating the field.

Kazakhstan's Kashagan oil field produced 750,000 tons of oil since pumping began there in September.  Kazakh Energy Minister, Kanat Bozumbayev, said Kashagan will produce about 1 million tons of oil by year end. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $53.47, up 18 cents

RBOB - Jan $1.5998. up 62 points

HO - Jan $1.6682, down 5 points


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January WTI traded within $1 range on its last trading day

December 20, 2016

Recap: A lack of new fundamentals, combined with light volume ahead of the New Year, left oil prices little changed. January WTI traded within a $1 range on what was its last trading day. This spot contract traded as much as 1.1% higher on the day, posting modest gains on reports of the killing of a Russian ambassador in Turkey.

Gains were severed, with January WTI closing at $52.12 a barrel, up 22 cents, or 0.42%. Brent for February delivery fell 29 cents, or 0.53%, to settle at $54.92 a barrel.

January RBOB gained .68 cent, or 0.4%, to close at $1.5639 a gallon. January heating oil  rose .33 cent, or 0.2%, to $1.6690 a gallon. 

Fundamental News:   Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending December 16th increased by 315,283 barrels on the week but fell by 245,127 barrels from Tuesday, December 13th to 68,744,078 barrels.

Official data showed that Saudi Arabia's crude oil exports in October fell to 7.636 million bpd from 7.812 million bpd in September.  According to the Joint Organizations Data Initiative, Saudi Arabia's oil output in October fell by 25,000 bpd on the month to 10.625 million bpd.  The country's crude oil stocks fell by 2.102 million barrels to 276.586 million barrels.  Saudi Arabia's direct crude burn increased by 2,000 bpd to 492,000 bpd.  Its oil product exports increased by 94,000 bpd to 1.443 million bpd in October while its demand for oil products fell by 30,000 bpd to 2.488 million bpd in October. 

Libyan oil facility guards prevented two of the country's largest fields from resuming operations, days after the National Oil Corp reached an agreement to restart operations there to increase output.  An NOC official said that the El Feel or Elephant and Sharara fields still are not operational after they were shut more than a year and a half ago.  Separately, an oil tanker docked at Libya's Es Sider port to load the first cargo of crude since the terminal reopened following a two year closure.  The tanker is due to start loading 600,000 barrels of crude on Tuesday.   

Venezuela's President, Nicolas Maduro, is set to travel to oil producing countries soon. 

Lukoil sees Russian oil companies agreeing to swap quotas in the OPEC deal.  It said if a company sees production declining more sharply than required by the quota, another company could take up the slack. 

Angola's crude oil exports are expected to increase to 1.65 million bpd in February, up from 1.61 million bpd in January. 

Goldman Sachs reported that the annual average US production will fall by 60,000 bpd year on year in 2017 assuming the oil rig count in the US remains at current levels. 

The Brent Pipeline System, which carries crude oil from the North Sea for processing at the Sullom Voe terminal in the Shetland Islands, is back online.  Flows through the pipeline, which carries about 83,000 bpd of crude, resumed on December 17th and was in the process of returning to normal operating levels. 

IIR reported that US oil refiners are expected to shut in 235,000 bpd of capacity in the week ending December 23rd, increasing available refining capacity by 289,000 bpd from the previous week.  IIR expects offline capacity to fall to 61,000 bpd in the week ending December 30th

Colonial Pipeline Co is allocating space for Cycle 72 shipments on Line 20, its distillates line from Atlanta, Georgia to Nashville, Tennessee.  It is also allocating space for Cycle 72 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.

Enbridge Inc advised shippers of apportionment for January at its Mainline System.  It said Line 4/67 nominations are at 33% for January. 


Early Market Call - as of 9:00 AM EDT

WTI - Feb $53.69, up 63 cents

RB - Jan $1.6790, up 1 cent

HO - Jan $1.5898, up 2.59 cents 


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Oil futures ended with weekly gains after falling for most of the week

December 19, 2016

Recap: Oil futures squeezed out weekly gains after falling for most of the week. January WTI retraced weekly losses following a Goldman Sachs report in which the banking institution revised its forecast for 2017 prices, and after the Russians reiterated their support for cutting back on output. January WTI settled at $51.90 a barrel, up $1.00, or 1.96%, approximately 0.8% on the week. February Brent was up $1.19, or 2.20%, to settle at $55.21, up 1.7% on the week.

After bouncing off of support set at $49.84 on Thursday, January WTI was able to overcome Thursday's high and recapture losses posted earlier in the week. At the moment, technical indicators are trending in neutral territory, indicating possible sideways activity. Until it becomes clearer as to whether those that agreed to output cuts are in fact meeting their commitments, we would expect further sideways action, with WTI trending within the $50 to $55 ranged.

January RBOB settled at $1.557 a gallon, up 1.5 cents, or 1%, about 3.3% higher for the week. January heating oil tacked on 3 cents, or 1.9%, to $1.672 a gallon, for a weekly rise of around 2.1%. 

Fundamental News:  A Kuwait Petroleum official said Friday that Kuwait will be making bigger cuts in oil sales to U.S. and European customers than Asian buyers. Meanwhile Saudi Aramco told Asian refiners it will suspend a supply flexibility clause, known as operational/lifting tolerance, from January until further notice. The operational/lifting tolerance usually allows customers to request 5-10% more crude oil than volumes allocated by Aramco in case they need more oil.

In a research note to clients on Friday,Goldman Sachs said that global oil prices will be capped near term by a stronger dollar and the potential ramp up in Libyan production, and that they were keeping their December WTI price forecast at $50.00 per barrel. The investment bank though noted that there "will be little evidence of production cuts until mid-January which we believe will be the next catalyst for the large move in prices, which in our view will be higher to $55 per barrel". The bank was raising its 2Q 2017 WTI price forecast by $2.50 per barrel to $57.50 per barrel. They also noted that they were smoothing out their medium term price forecast with their 2Q 2017 and 2018 for WTI to $55 per barrel and for Brent at $58 per barrel. The bank noted that after analyzing Saudi Arabia's fiscal revenue outlook for 2017, it sees the kingdom having a strong incentive to cut production to achieve a normalization of inventories, even if it requires a larger unilateral cut, consistent with the comments made by Saudi officials last week. Therefore, the bank is forecasting an average 84% compliance with the announced collective OPEC and non-OPEC production cuts. It feels the outlook for higher prices will result in U.S. shale production growing by 300,000 b/d in the second half of next year.

Oil Movements estimates that OPEC crude oil shipments are expected to increase by 380,000 b/d to 24.26 million b/d in the four weeks ending December 31st, compared to the period ending December 3rd.

Baker Hughes reported Friday afternoon that U.S. oil drillers added 12 oil rigs on the week, extending a seven month long drilling recovery. Some 510 oil drilling rigs are now operating in the United States. A year ago some 541 rigs were operating in the U.S. Almost two-thirds of the rigs added since May were in the Permian basin.

IIR reported Friday that it estimated U.S. refining activity this week saw some 524,000 b/d of capacity offline, some 171,000 b/d more than the preceding week.


Early Market Call - as of 9:00 AM EDT

WTI - Jan $52.90, down 5 cents

RBOB - Jan $1.5570, down 1 point

HO - Jan $1.6713, down 10 points 


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Future prices slipped as U.S. dollar reached 14-year highs

December 16, 2016

Recap: The oil market detached itself from underlying fundamentals and instead responded to strength in the dollar. Futures prices slipped as the dollar reached 14-year highs in reaction to a rise in U.S. interest rates. For a brief moment and for the first time in a week, January WTI traded below $50 dollars a barrel. Belief that OPEC and non-OPEC producers will adhere to recent agreed upon cuts in output is working to keep a floor under falling  prices. These early losses were pared, with January WTI settling at $50.90, down 14 cents, or 0.27%, while February Brent closed at $54.02, up 12 cents, or 0.22%. 

January RBOB gained 0.0090 cents, or 0.58%, to settle at $1.5421 a gallon, while January heating oil finished at $1.6435 a gallon, down 0.0015 cents, or 0.0.9%.

Fundamental News:  The EIA stated in its weekly report that inventories in Cushing, Oklahoma continue to increase, in part as refiners in the US Gulf of Mexico store their crude to lower their year-end tax bill in Texas and Louisiana.  It stated that with Cushing stocks approaching the all-time high set in May, WTI will remain under pressure, particularly the January-February spread.  It also highlighted the big task OPEC and Russia face to bring the global supply and demand into balance.  Meanwhile, the EIA also reported that gasoline exports from the US increased to a new record high last week of 1.131 million bpd.  The previous record was set the week ending November 4th.

A source at Saudi Aramco said the company was selectively cutting its January crude loadings to Asian customers by about 5%, with a second round of cuts expected in February.  In total, Asia will see almost a third of the country's total OPEC cut, in addition to cuts made to US and European buyers.  Global exports are likely to fall by about 6.5%, in line with Saudi Arabia's commitment to cut about 500,000 bpd under the deal.

Kuwait's Oil Minister, Essam Abdul Mohsen Al-Marzouq, said the country expects oil prices to be about $50-$60/barrel in January when the OPEC deal to cut output comes into effect.  Kuwait agreed to contribute 131,000 bpd out of OPEC's planned 1.2 million bpd cut starting January 1, 2017.   Separately, he said the country is preparing to restart production from Neutral Zone oilfields jointly operated by Saudi Arabia and Kuwait but any additional supplies will compensate for a cut from other fields. 

Nigeria's Oil Minister, Emmanuel Ibe Kachikwu, said the country's oil production increased to about 1.8 million bpd, ahead of the expected signing of a deal over repayments of $5.1 billion in debt from joint venture projects. 

Libya is preparing this week to reopen two of its largest oil fields and ship the first cargo from its largest export terminal in two years.  Libya's Sharara oil field and the El Feel, or Elephant field, will soon start pumping crude to the Zawiya refinery and the Mellitah energy complex after pipelines reopened on December 14th.  The two western fields have been closed for more than a year and a half and have a combined output capacity of more than 450,000 bpd. 

Russia plans to increase its crude oil exports and transit across its territory by 200,000 bpd in the first quarter of next year.  Russian crude oil exports and transit in January-March 2017 will total nearly 5 million bpd, up 200,000 bpd from the fourth quarter. 

Gasoline stocks in independently held storage in the Amsterdam-Rotterdam-Antwerp hub in the week ending December 15th fell by 1.41% on the week but increased by 20.1% on the year to 980,000 tons.  Gasoil stocks fell by 2.84% on the week and by 31.48% on the year to 2.564 million tons while fuel oil stocks increased by 6.68% on the week but fell by 24.44% on the year to 782,000 tons. 


Early Market Call - as of 9:30 AM EDT

WTI - Jan $51.37 up 47 cents

RBOB - Jan $1.5605 up 1.84 cents

HO - Jan $1.6647 up 2.27 cents


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Oil prices fell for the first time in five sessions

December 15, 2016

Recap: Oil prices fell for the first time in 5 sessions, filling the price gap created after non-OPEC members agreed to cut output in an effort to prop up prices. Behind today's sell-off was Tuesday's report by the IEA indicating OPEC output for the month of November was greater than estimated and Wednesday's EIA report on U.S. crude oil inventories, which increased in Cushing, OK. Efforts to avoid sales or transference taxes at the end of the year most likely contributed to last week's stock draw in crude oil inventories. This trend may continue up and into the New Year.

January WTI fell $1.94 cents, or 3.7%, to settle at $51.04 a barrel, while February Brent slipped $1.82, or 3.3%, to $53.90 a barrel. This sell-off follows Tuesday's settlement for both grades, which was highest since July 2015.

January RBOB fell 1.8 cents, or 1.1%, to $1.533 a gallon, while January heating oil finished at $1.644 a gallon, down 3.1 cents, or 1.9%.

Fundamental News:  Saudi Arabia's Energy Minister, Khalid al-Falih, said it would take some time for the market to recover after a global oil deal between OPEC and non-OPEC producers to limit supplies.  

In its monthly report, OPEC stated that it produced 33.87 million bpd in November, up 150,000 bpd from October.  OPEC said the supply cuts agreed to by non-OPEC producers will help bring forward market rebalancing to the second half of 2017.  OPEC left its 2017 world oil demand growth forecast unchanged at 1.15 million bpd.  It expects non-OPEC oil supply to increase by 300,000 bpd in 2017 compared with its previous forecast of 230,000 bpd.  OPEC cut its demand forecast for its crude in 2017 by 60,000 bpd to 32.63 million bpd following the upward revision to the 2017 non-OPEC supply estimate.  OPEC said the global oil market will see an average surplus of 1.24 million bpd in 2017 compared with a 950,000 bpd surplus implied in the previous report.

Russia's Energy Minister, Alexander Novak, said Russian oil companies will cut their oil output proportionately to their share in domestic production.  He added that the ministry was still forecasting oil production in Russia for the next year at 548-551 million tons or 11.01-11.07 million bpd.    Meanwhile, according to reports in RIA, Russia is not considering cuts to oil exports, only cuts in production.

Separately, Russia's Finance Minister, Anton Siluanov, said a recent increase in global oil prices was not driven by structural factors but was a reaction to leading producers' decision to cut output. 

Iran's crude oil exports in December are expected to fall 8% from November to a five month low, as lower shipments to China and other countries in Asia offset increased exports to Europe.  Iran's December crude exports excluding condensate are expected to fall to 1.88 million bpd from 2.04 million bpd in November. 

Nigerian National Petroleum Corp said the Nigerian government intends to set up a petroleum force to combat vandalism and attacks on its oil and gas infrastructure in 2017. 

Nigeria's President Muhammadu Buhari told lawmakers in his 2017 budget presentation on Wednesday that he wants to restore oil output to 2.2 million bpd.  A series of attacks since January on energy facilities in the southern Niger Delta cut oil production in the country, which stood at about 2.1 million bpd at the start of 2016.  

IIR reported that US oil refiners are expected to shut in 454,000 bpd of capacity in the week ending December 16th, cutting available refining capacity by 101,000 bpd from the previous week.  IIR expects offline capacity to fall to 164,000 bpd in the week ending December 23rd. 


Early Market Call - as of 9:00 AM EDT

WTI - Jan $50.04, down $1.00

RBOB - Jan $1.5137, down 1.98 cents

HO - Jan $1.6316, down 1.18 cents


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IEA report indicates OPEC overproduced 500,000 barrels/day more than estimated in November

December 14, 2016

Recap: Oil prices peaked in early morning trading, as gains were trimmed after an IEA report indicated OPEC overproduced 500,000 barrels per day more than estimated for the month of November. This overproduction dimmed prospects that OPEC would adhere to the agreed upon output cuts. It also overshadowed the IEA revised estimates for consumption, which they have set at 1.4 million barrels per day, up 120,000 bpd. 

January WTI settled at $52.98, up 15 cents, or 0.28%. Brent for February delivery gained a modest 3 cents, or 0.05%, to settle at $55.72. 

January RBOB finished at $1.551 a gallon, up less than a cent, or 0.5%, while January heating oil  added under half a penny, or 0.2%, to $1.675 a gallon.

Fundamental News: Genscape reported that higher incoming and lower outgoing pipeline flow contributed to the largest weekly increase at the Cushing, Oklahoma crude terminal since February 2015.  Canadian crude flow on TransCanada's 590,000 bpd Keystone Pipeline increased by 94,000 bpd to 380,000 bpd in the week ending December 2nd.  Crude inventories at Cushing could continue to increase at the end of the year as crude market players store barrels in the Midcontinent to avoid relatively higher end-year tax assessments along the Gulf Coast. 

The IEA's chief, Fatih Birol, said a re-balancing of world oil markets could occur in the first half of next year if production cuts by OPEC and other producers are implemented.  He said global demand will be weaker with higher prices.  He also stated that it was too early to judge energy policy of incoming Trump administration in the US. 

The IEA stated in its monthly oil market report that global oil demand will increase more than expected in 2016 and 2017.  It said revisions to its estimate of Chinese and Russian consumption had prompted it to increase its forecast for global oil demand growth this year by 120,000 bpd to 1.4 million bpd and to lift its forecast for 2017 by 110,000 bpd to 1.3 million bpd.  The IEA said it had more than halved its forecast for non-OPEC supply growth for next year to 220,000 bpd, a cut of 255,000 bpd, following the agreement with Russia and 10 other non-OPEC producers to join OPEC's efforts to cut output.  The IEA said non-OPEC oil production fell by 160,000 bpd in November to 57.1 million bpd while OPEC crude output increased by 300,000 bpd to a new record high of 34.2 million bpd. 

Russia's Energy Minister, Alexander Novak, said he would discuss with Russian oil companies how they will cut oil production to implement a pact between OPEC and non-OPEC oil producers on Wednesday.  He stated that Russia's oil output cut under the deal reached with OPEC and non-OPEC producers will probably reach 300,000 bpd in May. 

Kuwait's Petroleum Corp officially notified its customers of a cut in their contractual crude oil supplies for January. 

Iran's Oil Minister, Bijan Zanganeh, said oil prices are likely to settle at $50-$55/barrel.

Oman will inform its customers on Tuesday of a cut in their crude oil supplies for January, in line with a deal with OPEC to cut its production. 

Algeria's Energy Ministry has sent instruction to its oil sector regulator to begin production cuts of 50,000 bpd starting January 1st. 

Abu Dhabi National Oil Company told customers in Asia that it would cut some crude supplies in January, as the OPEC member seeks to implement a producer deal to cut output. 

According to Platts trade flow software cFlow, about 720,000 metric tons of distillates left the US Gulf Coast to date to discharge in Europe and North Africa in December. 


Early Market Call - as of 9:00 AM EDT

WTI - Jan $52.14, down 84 cents

RBOB - Jan $1.5268, down 2.39 cents 

HO - Jan $1.6654, down 93 points 


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