Recap: Oil futures climbed to their highest level since July 2015, on strong belief that OPEC members are sticking to their agreement to cut output. Current adherence to the cuts sits at just over 90%. April WTI peaked above $55 a barrel, while April Brent broke above $57 a barrel. Gains were severed as the session progressed, with April WTI settling at $54.33, up 55 cents, or 1%, while April Brent finished at $56.66, up 48 cents, or 0.85%.
RBOB futures dragged the rest of the complex lower, as the March contract fell 2.26 cents, or -1.5%, to settle at $1.4940 a gallon. March heating oil finished up 0.6 cents, or 0.4%, to settle at $1.6425 a gallon.
Fundamental News: OPEC's Secretary General, Mohammed Barkindo, said that while confidence has returned to the oil market due to agreed output cuts, it is too early to say whether the output cut agreement should be extended. He said any decision to extend the agreement past June will depend on global stock levels and an assessment of market fundamentals. He said January data showed conformity from participating OPEC countries with output cuts above 90% and added that oil inventories would decline further this year. He also said that he expected non-OPEC countries to raise their compliance. He said he was cautiously optimistic on the outlook of the oil market.
Iran's Oil Minister, Bijan Zanganeh, said OPEC and non-OPEC oil producers are committed to their crude production cut.
According to Petrologistics, OPEC increased its oil exports in the first two weeks of February, a sign the group could be slipping back after record compliance in its first month of output cuts. It reported that the first 15 days of February have seen exports increase above the trailing average following a large decline in January. Exports from OPEC countries in the first two weeks of February were higher than the average level from October 2015 to September 2016.
The Joint Organizations Data Initiative reported that Saudi Arabia increased its oil exports and production last year to the highest monthly averages on record. Exports increased to 7.65 million bpd on average last year from 7.39 million bpd a year earlier.
Iraq's Prime Minister, Haider Al-Abdi said the country needs oil prices to reach $60/barrel to plug the public deficit gap.
Iran is set to sign a contract with Russia in the next 15 days to sell 100,000 barrels of oil.
Vitol's executive committee member, Russell Hardy, said transport will be the main driver of demand growth for refined oil products, especially in Asia. Vitol expects about 400 million cars to be added to the global fleet over the next 10 years, with China and India being the main growth countries. Vitol expects global demand for diesel and gasoline to peak in 2027-2028 as the efficiency of engines continues to improve and assuming about 100 million electric vehicles are on the road. However, demand growth for oil products in aviation and petrochemicals will continue long after.
Rosneft signed investment and crude purchasing agreements with Libya's National Oil Corp as more international companies return to Libya to gain access to Africa's largest reserves.
US gasoline margins fell to their lowest level since October 2015 on fears that record inventories may persist amid signs of weakening demand. The gasoline crack spread fell by more than 7% to a low of $9.30/gallon in early trading on Tuesday.
Kinder Morgan Canada will limit crude nominations on its Trans Mountain Pipeline System by 25% in March, meaning the line will carry 75% of nominated volumes. March volumes on the Trans Mountain mainline system are expected to average 296,105 bpd, down from 326,280 bpd in February. Throughput on the Puget Sound Pipeline is expected to average 136,546 bpd in March, down from 146,833 bpd in February.
Early Market Call - as of 9:00 AM EDT
WTI - Apr $53.59, down 75 cents
RBOB - Mar $1.4894, down 47 points
HO - Mar $1.6124, down 3.05 cents
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