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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