Market Intel

Oil prices fell as the dollar strengthened and U.S. supplies rose

Feb 07, 2017

Recap:  Oil prices slipped amidst a strengthening dollar and rising U.S. supplies. Futures fell throughout the session, with March WTI falling as much as 1.7% on Monday, reaching a low of $52.91 before paring losses for a settlement of $53.01, down 82 cents, or 1.52%. April Brent closed at $55.72, down $1.09, or 1.92%.

The March RBOB/WTI crack spread slipped again, stopping just above Friday's low of $10.26, prior to settling at $10.41, down $1.04 from Friday's close.

March gasoline fell 4.3 cents, or 2.8%, to $1.510 a gallon and March heating oil lost 3 cents, or 1.8%, to $1.635 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending February 3rd increased by 1,042,065 barrels on the week and by 1,099,919 barrels from Tuesday, January 31st.

According to an S&P Global Platts survey, the ten OPEC members obligated to cut output under the agreement signed late last year achieved 91% of their required cuts in January, with production falling 1.14 million bpd from October levels.  In total, OPEC's 13 members produced 32.16 million bpd in January, down 690,000 bpd from December.  Saudi Arabia produced 9.98 million bpd, below its allocation of 10.06 million bpd under the deal.  Kuwait's oil production for January was under its quota of 2.71 million bpd, coming in at 2.7 million bpd, a 130,000 bpd decline from December.  Meanwhile, Iraq produced 4.48 million bpd compared with a quota of 4.35 million bpd.  Iran, which is allowed to increase its production to 3.8 million bpd under the deal, produced 3.72 million bpd, up 30,000 bpd on the month.  Libya and Nigeria increased their production by 50,000 bpd and 210,000 bpd, respectively, as their production continues to recover from militancy-related outages.  

Russia's Energy Minister, Alexander Novak, said his Venezuelan counterpart said the global oil deal had a positive impact on the global market. 

Seaway Crude Pipeline's 400,000 bpd Legacy pipeline resumed operations on February 5th, six days after a rupture northeast of Dallas stopped shipments.   

The Dakota Access Pipeline may start operating June 1st, assuming no new obstacles prevent it.  Energy Transfer Partners will begin filling it with oil around February 15th, barring complaints or legal action to stop it.  The company is still awaiting a permit from the US Army Corps of Engineers to build the last portion of the pipeline. 

The Houston Ship Channel was closed to inbound vessels due to fog.  There were 30 vessels waiting to dock.  

Iraq's southern crude oil exports fell in January from a record high a month earlier as the country implements output cuts agreed by OPEC and other major producers to cut the global oversupply.  The country's exports fell 187,000 bpd to 3.323 million bpd in January from the previous month. 

The Iranian Students News Agency reported that Iran's oil production capacity is expected to reach 4 million bpd in March. 

Iran's Foreign Ministry spokesman, Bahram Qassemi, said the country's missile test was not a signal to Donald Trump and was aimed at defense. 

IIR reported that US oil refiners are expected to shut 1.295 million bpd of capacity in the week ending February 10th, reducing available refining capacity by 258,000 bpd from the previous week.  IIR also reported that it expects offline capacity to increase to 1.371 million bpd in the week ending February 17th. 

Early Market Call - as of 9:00 AM EDT

WTI - Mar $52.13, down 88 cents

RBOB - Mar $1.4830, down 2.69 cents

HO - Mar $1.6131, down 2.13 cents 

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