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Market Intel Archives

Oil prices moved higher after EIA report indicated 3.6 million barrel fall in US crude oil stocks

April 27, 2017

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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Oil prices settled up on expectations of 1.7 million barrel draw in U.S. crude oil inventories

April 26, 2017

Recap: After obtaining its lowest settlement since March 28, WTI bounced back on Tuesday, stemming 6 days of declines, on expectations of a 1.7 million barrel draw in U.S. crude oil inventories. June WTI gained as much as 1.09% prior to paring gains for a settlement of $49.56 a barrel, up 33 cents, or 0.67%. June Brent tacked on 50 cents, or 0.97%, to settle at $52.10 a barrel.

Despite today’s comeback, this market is still suffering from an oversupply situation, making it a less attractive investment, and in turn, making it difficult for advances to be sustained. Higher U.S. production has so far managed to negate OPEC output cuts and will most likely do so as long as OPEC does not take serious steps to cut output by extending its agreement.

May RBOB closed at $1.623 a gallon, up 0.1%, while May heating oil gained 0.2%, to settle at $1.545 a gallon.

Fundamental News Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 700,000 bpd to 67.9 million barrels in the week ending April 21st. 

Qatar’s Energy Minister, Mohammed al-Sada, is satisfied with the level of compliance by OPEC and non-OPEC producers with an agreement reached last year to cut output. 

Russia’s Energy Minister, Alexander Novak, said Russia needs to see more technical analysis of the global oil market and stock levels before deciding to extend an oil supply reduction agreement.  Russia’s Energy Minister will hold talks with Russian oil companies this week before his meeting with OPEC and non-OPEC counterparts in Vienna on May 25th.  Analysts predict Russia will prolong the cuts, despite the problems this could cause for its largest producers. 

Separately, Russia’s Deputy Prime Minister, Dvorkovich, said Russia is ready to maintain its current oil output and may increase it provided there are no risks of price declines.  He said a fragile balance has settled on the global oil market. 

Azerbaijan’s Energy Minister, Natig Aliyev, said he would discuss a possible extension of the global oil output cut deal at a meeting with his Saudi counterpart on Wednesday. 

The head of industry consultant FGE, Fereidun Fesharaki, said the OPEC cuts need to be prolonged until the first half of next year for the goal to be met. 

According to Bloomberg, preliminary US waterborne crude imports increased by 1.2 million bpd to 5.5 million bpd in the week ending April 20th.  The Gulf Coast saw the largest increase of 878,600 bpd to 3.4 million bpd, while imports to the East and West Coast increased by 7,500 bpd and 335,400 bpd, respectively.  Total crude and product imports increased by 718,600 bpd to 7.2 million bpd. 

IHS data showed that crude and refined product shipments from the US Gulf reached 4.19 million metric tons on 101 ships in the week ending April 20th. 

Shell completed planned maintenance at the Bonga oilfield offshore Nigeria and resumed production on April 8th.  The field has the capacity to produce 225,000 bpd of oil and 150 million standard cubic feet of gas. 

Pemex completed a $133.5 million hedging program that will give it the right to sell up to 409,000 bpd of oil at $42/barrel from May through December.  The program offers Pemex price protection if oil trades between $37-$42/barrel for the rest of the year, which the company said is the most likely bear case for Mexican oil.  If oil prices fall to $37/barrel, Pemex would receive the maximum protection under its hedging contracts. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.14, down 42 cents

RBOB - May $1.6000, down 2.16 cents

HO - May $1.5318, down 1.36 cents


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Oil futures unable to sustain gains as skepticism remains over extension of OPEC output cuts

April 25, 2017

Recap: Oil futures opened the session trading to the upside, but were unable to sustain gains, as U.S. production once again overshadowed possibilities that OPEC would extend output cuts. After reaching a high of $50.22, June WTI slipped $1.19, to a low of $49.03, and then proceeded to fall into a 25 cent trading range for the remainder of the session. A lack of hedge fund buying, along with skepticism over the extension of OPEC output cuts has taken strength out of this market. June WTI fell 39 cents or 0.8%, to settle at $49.23 a barrel, while Brent for June delivery lost 36 cents, or 0.7%, to settle at $51.60 a barrel.

May RBOB fell 2.31 cents, or 1.4%, to settle at $1.6214 a gallon. Heating oil for May delivery settled at $1.5427, down 1.06 cents, or 0.68%.

Fundamental News:  Genscape reported that crude oil inventories held in Cushing, Oklahoma in the week ending April 21st fell by 1.1 million barrels on the week and by 346,000 barrels from Tuesday, April 18th to 69.9 million barrels on the week. 

The meeting of a technical committee of OPEC and non-OPEC nations in Vienna concluded that a six month extension of output cuts would be necessary. 

Iran’s Oil Minister, Bijan Namdar Zanganeh, said it is unrealistic to expect oil at $60/barrel. 

According to comments by Russian officials and details of investment plans released by oil firms, Russia’s oil output could increase to its highest level in 30 years if OPEC and non-OPEC producers do not extend a supply reduction deal beyond June 30th.  Russia’s Deputy Prime Minister, Arkady Dvorkovich, said investment programs show that it is possible that Russia’s oil production will increase once the deal expires.  He did not give figures but Russia’s Energy Minister, Alexander Novak, previously stated that the country’s output could reach 548-551 million tons a year or 11.01-11.07 million bpd in 2017, the highest average since 1987.  Under the deal with OPEC, Russia was to cut production to 10.947 million bpd from 11.247 million bpd. 

Societe Generale reported that OPEC will rollover its crude supply target of 32 million bpd in the second half of the year.  This will result in global draws of 1 million bpd over the same period. 

Libya’s National Oil Corp said the country’s Elephant oilfield remains shut in and requires power supply from the country’s largest oil field, the Sharara field, in order to restart.  Denying a report that the field had resumed operations after a two year halt, it said the Elephant field remains under force majeure status.   

Goldman Sachs reported that US production may increase by 535,000 bpd between the fourth quarter of 2016 and fourth quarter of 2017 across the Permian, Eagle Ford, Bakken and Niobrara shale plays, assuming the rig count remains at the current level. 

IIR reported that US oil refiners are expected to shut in 740,000 bpd of capacity in the week ending April 28th, increasing available refining capacity by 142,000 bpd in the previous week.  IIR expects offline capacity to fall to 558,000 bpd in the week ending May 5th.

Pennsylvania’s Department of Environmental Protection and the Pennsylvania Petroleum Association said the US state of Pennsylvania has no plans to restrict the sale of heating oil with more than 15 ppm sulfur on a statewide basis, denying a rumor that such a change would be implemented on June 1st.

The Bank of America Merrill Lynch said the Atlantic Basin gasoline market is expected to weaken into the second half of the year. 


Early Market Call - as of 9:00 AM EDT

WTI - June $49.16, down 7 cents

RBOB - May $1.6103, down 1.10 cents

HO - May $1.5409, down 18 cents


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Growing US production continued to outweigh output cuts by OPEC

April 24, 2017

Recap: WTI traded below $50 a barrel for the first time in two weeks, as growing U.S. production outweighed output cuts made from within OPEC and among some non-OPEC producers. Attempts to reverse course were met with resistance and prices once again turned to the downside. By early morning trading, volume was high, with June WTI posting more than 400,000 contracts traded. This spot contract fell $1.09, or 2.15%, to settle at $49.62 a barrel, its lowest settlement in a month. June Brent settled at $51.96 a barrel, down $1.03, or 1.94%. Prices declined approximately 7% on the week.  

May RBOB fell 1.6% to $1.645 a gallon, down about 5.2% for the week, and May heating oil slipped 1.6% to $1.553 a gallon, for a weekly loss of 5.8%.

Fundamental News:  An OPEC monitoring committee recommended that producers extend the global agreement to cut supplies for six months from its June expiry.  The conclusion coincides with recent statements from oil ministers in Saudi Arabia, Kuwait and other members of OPEC.  Saudi Arabia and Kuwait favor extending their production-limiting agreement with non-OPEC producers into the second half of the year.  Meanwhile, Russia’s Energy Minister, Alexander Novak, declined to say whether Russia would adhere to an extension before a joint meeting on May 25th, saying global stocks were declining.  He said Russia’s output cuts had reached 250,000 bpd and would reach a targeted 300,000 bpd by the end of April. He also stated that the total cuts in global oil production in March amounted to 1.7 million bpd.  

Iran’s crude oil exports are set to reach a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.  Crude oil loadings from Iran are expected to total 1.66 million bpd in May, down from 1.8 million bpd in April.  Part of the decline may also be attributable to a decline in demand, as loadings bound for India are set to fall to a one-year low after a dispute over the award of a contract for a gas field, and Japan’s orders fell by more than half from April.  Iran is storing about 3 million barrels back into storage in May. 

Baker Hughes reported that US drillers added oil rigs for a 14th consecutive week.  The number of rigs searching for oil in the week ending April 21st increased by 5 to 688, the most since April 2015. 

Libya’s El-Feel oil field reopened on Tuesday after a two year halt in operations.  The field has not resumed pumping oil yet due to an electricity outage.  Authorities are working to resolve the power outage soon. 

Exports of Nigeria’s Bonny Light crude are expected to total 203,000 bpd in June, up from 189,000 bpd in May. 

According to Thomson Reuters Eikon, a record 48 million bpd of crude is being shipped across ocean waters in April, up 5.8% since December. 

Oil Movements reported that the volume of crude in transit is forecast to increase to 487 million barrels in the four week period ending May 6th. 

Goldman Sachs said there is no fundamental reason in the market to justify this week’s selloff in prices.  It said the pace of declines in US crude inventories is encouraging, with an acceleration in drawdowns expected through the second quarter as OPEC cuts output and demand increases.  Goldman Sachs reiterated its confidence in oil at a time when investors are concerned over whether US production will undermine cuts by OPEC and non-OPEC producers.


Early Market Call - as of 9:00 AM EDT

WTI - June $49.62, unchanged

RBOB - May $1.6379, down 60 points

HO - May $1.5564, up 35 points


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OPEC output cuts and increases in US production left oil futures around unchanged

April 21, 2017

Recap: Oil futures bounced around the unchanged level, trading within a 30 cent range for most of the session, as traders continue to sort through OPEC output cuts and increases in U.S. production. Waning confidence in OPEC’s agreement to cut back on output, combined with growing U.S. production has taken the wind out of the recent ascent in prices, as is evident in calendar spreads. Weakness in these spreads extends from the June17-July17 spread all the way through to December17-January18. After peaking at -0.06 in December, the discount in the June17-July17 WTI spread has weakened by more than 30 cents. This, along with falling open interest, indicates doubts that this market will be able to sustain strength. 

June WTI, made new lows in post settlement trading, falling below the 30-day moving average of $50.77. This allows for a run at support set at $50.35. Below this level, support can be found at $49.70. Above the market, resistance can be found at $50.85 and $51.30.  June WTI settled at $50.71, down 14 cents, or 0.3%. June Brent finished up 6 cents, or 0.11%, settling at $52.99.

May RBOB gained 0.7% to $1.671 a gallon and May heating oil finished down by 0.2% to $1.579 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, April 18th fell by 740,418 barrels on the week and by 708,024 barrels from Friday, April 14th to 70,271,490 barrels. 

Saudi Arabia’s Oil Minister, Khalid al-Falih, said crude producing countries reached an initial agreement to extend output cuts.  He said OPEC and other major producers have failed, after three months of cutting production, to achieve their target of reducing oil inventories below the five-year historical average, although there is a high level of commitment.  He said countries participating in the cuts have yet to reach a consensus on continuing their agreement into the second half of the year, and an extension would not necessarily be for an additional six months.  Separately, Oman’s Oil Minister, Mohammed Al-Rumhy, said Gulf Cooperation Council countries agreed to push for an extension of cuts during a meeting on Wednesday.  He said a high number of producers favored extending a supply restraint agreement.  Iran and Venezuela have expressed support for an extension of the cuts.  Meanwhile, Kuwait’s Oil Minister, Issam Almarzooq, stated that if OPEC and non-OPEC oil producers decide to extend their six month agreement on output cuts, the cuts may become less deep as oil demand is expected to be stronger for seasonal reasons in the second half of 2017.  In regards to Iran, he stated that Iran’s Oil Minister made a commitment to freeze output at 3.8 million bpd for the rest of the year on the assumption that the cuts are extended beyond June. 

Russia’s Energy Ministry said it is still too early to comment if the oil output deal between OPEC and non-OPEC producers will be extended through the second half. 

The leader of Iraq’s Shi’ite ruling coalition, Ammar al-Hakim, said Iraq supports an extension of a deal between oil exporters to reduce global supply in order to support crude prices. 

According to the EIA, crude imports from Saudi Arabia increased by 34% to 1.19 million bpd in the week ending April 14th. 

Venezuela is scheduled to unload 13 tankers carrying oil products this month, the highest this year, as PDVSA’s refineries continue to struggle. 

Libya’s El Feel or Elephant oil field is expected to resume operations. 


Early Market Call - as of 9:00 AM EDT

WTI - May $50.62, down 2 cents

RBOB - May $1.6717, up 12 points

HO - May $1.5776, down 13 points


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Oil futures fell despite 1 million barrel fall in crude oil inventories

April 20, 2017

Recap: Brent fell to its lowest level in 11 days, while WTI hit an 8 day low after the EIA reported a 1.5 million barrel increase in gasoline inventories, as opposed to the expected 1.9 million barrel decrease. Oil futures fell despite the 1 million barrel fall in crude oil inventories, which was smaller than the expected 1.5 million barrel draw. May WTI fell as much as 4.4% in a late session sell-off, while June Brent slipped as much as 4.2% prior to settlement. May WTI settled at $50.44 a barrel, down $1.97, or 3.76% and June Brent settled at $52.93 a barrel, down $1.96, or 3.57%.

June WTI, the soon to be spot contract ,settled just above the 30-day moving average of $50.77, making this Thursday’s target. With moving oscillators set in overbought territory and pointing to the downside, we would look for a test at the aforementioned average and for a run at $50.35.

May RBOB fell 5.2 cents, or 3.04%, to $1.6590 a gallon, while May heating oil lost 4.06 cents, or 2.5%, to $1.5813 a gallon.

Fundamental News:  The EIA reported that US distillate fuel oil stocks fell to the lowest level in the week ending April 14th since November 2015.  Distillate stocks fell by about 2 million barrels to 148.3 million barrels.  Distillate stocks in the East Coast fell by 1.5 million barrels to 51.9 million barrels, the lowest level since July 2015. 

The Renewable Fuels Association said blending of ethanol in US gasoline increased over a key level of about 10% in 2016.  The average content of ethanol in finished gasoline totaled 10.04% in 2016.  Higher ethanol blends including E15, which has about 15% biofuel content, contributed to the increase.  

The EPA said it would reconsider a rule on emissions from oil and gas operations and delay its implementation.  It said it would delay the rule’s compliance date, which had been June 3rd, for 90 days, as the agency takes public comments. 

OPEC’s Secretary General, Mohammed Barkindo, said oil producing nations are moving closer towards ending a global oversupply and rebalancing the market.  He said OPEC will decide next month at its meeting on May 25th whether to extend its cuts in output beyond June.  He would not say whether the agreement will be extended for another six months, but added that any decision taken would be in the interest of all producing and consuming countries.  He added that OPEC and other producers are committed to reducing their stockpiles to the industry’s five year average and all countries participating in the six month deal to pare output are committed to restoring the market’s stability.  He also stated that OPEC is hoping to attract other non-OPEC producers in its effort to manage the oil market.   

Kuwait’s Oil Minister, Issam Almarzooq, said Iran will probably be allowed to keep its oil production unchanged if OPEC decides to extend its six month agreement on output cuts beyond June.   

The UAE’s Energy Minister, Suhail Al-Mazrouei, said a long time is needed for oil inventories to fall.  He said the UAE is satisfied with producers’ commitment to cutting output.  He also stated that the UAE is already fully compliant with its quota under the OPEC and non-OPEC agreement and could cut its production further in the month ahead.  The UAE cut its output in March by more than 200,000 bpd from the benchmark October level that the deal is based on.  He said over six months, the UAE will cut its output by at least 140,000 bpd and may reduce its production even further. 

Sources stated that OPEC plans to meet with non-OPEC producers on the same day as its scheduled May 25th conference. 


Early Market Call - as of 9:00 AM EDT

WTI - May $ 50.53 up 9 cents

RBOB - May $ 1.6681 up 91 points

HO - May $ 1.5860 up 47 points


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Oil futures fell after U.S. shale oil production posted largest increase in two years

April 19, 2017

Recap: Oil futures fell on Tuesday on anticipation that U.S. shale oil production for the month of May would post its largest increase in more than two years. This overshadowed the agreed upon production cuts by OPEC and some non-OPEC members, pushing prices to their lowest level in 7 days. A slight rebound ensued, with May WTI settling at $52.41, down 24 cents or 0.46%. June Brent fell 47 cents, or 0.85%, to settle at $54.89.  

Sustained moves below $53.21 in May WTI, continues to entice sellers into this market, which pushed this spot contract below the 10-day moving average for the first time since March 29th , with a settlement right on the average. Technically, there is more room to the downside, with a possible test at the $51.50 level. Resistance remains at $53.21.

May RBOB fell 0.5% to $1.711 a gallon, while May heating oil slipped 0.7% to $1.622 a gallon.

Fundamental News:  According to Bloomberg, crude stocks at Cushing, Oklahoma are expected to fall by 570,000 barrels to 68.8 million barrels in the week ending April 14th. 

Genscape forecast a draw in gasoline stocks of about 400,000 barrels in the New York Harbor region in the week ending April 14th. 

According to the Joint Organizations Data Initiative, Saudi Arabia’s crude oil exports in February fell to 6.957 million bpd from 7.713 million bpd in January.  The country’s crude production increased by 263,000 bpd to 10.011 million bpd in February.  Meanwhile, Saudi Arabia’s domestic crude throughput increased by 546,000 bpd to 2.673 million bpd in February. 

Separately, the Joint Organizations Data Initiative also reported that Kuwait’s crude exports fell by 0.7% in February to 1.916 million bpd from 1.93 million bpd in January. 

The UAE’s Energy Minister, Suhail bin Mohammed al-Mazroui, said he saw healthy oil demand growth this year and believed inventories would fall, but that it would take more time to rebalance the market.  He said conformity within OPEC and other producers was improving and that the UAE was complying 100% with its pledge to cut production.

According to Bloomberg, preliminary US waterborne crude imports fell by 419,000 bpd to 4 million bpd in the week ending April 14th.  Imports in the Gulf Coast fell by 166,000 bpd to 2.3 million bpd while imports in the East and West Coast fell by 111,400 bpd and 141,000 bpd, respectively.  Total crude and product imports fell by 114,800 bpd to 5.9 million bpd. 

A provisional loading schedule showed that Iraq will export an average 3.22 million bpd of Basrah crude in May, up from 3.171 million bpd in its April program.  About 2.382 million bpd of Basrah Light crude are scheduled to be exported in May, while exports of Basrah Heavy crude are estimated at 838,708 bpd. 

A BP well on Alaska’s North Slope is no longer leaking crude oil or natural gas.  Environmentalists called on the state to investigate.  The crude spray was discovered on April 14th and capped early April 16th.  A second leak was emitting gas at a reduced rate and was closed off overnight on April 16th.

Russia cut its oil production during the first 16 days of April to 1.501 million metric tons a day, down from 1.508 million metric tons as of the end of March. 

Colonial Pipeline is allocating Cycle 24 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.


Early Market Call - as of 9:00 AM EDT

WTI - May $52.48, up 7 cents

RBOB - May $1.7050, down 57 points

HO - May $1.6242, up 18 points


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Oil futures fell on Monday after rise in U.S. rig count

April 18, 2017

Recap: After rising overnight on signs of economic growth in China, oil futures fell on Monday after another rise in the U.S. rig count. Market activity was quiet due to the long Easter weekend.  May WTI settled at $52.65 a barrel, down 53 cents, or 1%, while Brent for June delivery slipped 53 cents, or 0.95%.

May RBOB rose 0.1% to $1.737 a gallon, while May heating oil lost 0.2% to $1.646 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Friday, April 14th fell by 481,391 barrels on the week and by 32,394 barrels from Tuesday, April 11th to 70,979,514 barrels. 

Saudi Arabia’s Energy Minister, Khalid al-Falih, said the level of compliance among OPEC and non-OPEC producers with a global deal to cut output is very good, above 100%, but added that it is premature to talk about extending the deal.  He said he saw a consensus within OPEC on stabilizing the oil market, and that producers would do whatever was necessary to achieve that goal, whether it took six months or more.  He said producers will look at the expected condition of the market over the next two years, and will be cautious when making their decision on any extension. 

Saudi Arabian Oil Co. chief executive, Amin Nasser, said the global oil market is moving closer to balance even as increases in US oil production push prices down in the short-term.  He said this is not a good indication of where the market is likely to be headed, as the large new production capacity and investment we will need in the future are lagging. 

Iran’s Oil Minister, Bijan Namdar Zanganeh, said compliance by OPEC and non-OPEC producers with an agreement to reduce oil production is improving month after month and the oil market is showing that by its favorable reaction.  He also stated that “OPEC’s decision to cut production has been a good one and we fully comply with its decision.” 

Libya’s National Oil Corp indefinitely delayed its Sharara oilfield output target.  The goal to increase output from the oilfield to 280,000 bpd, which was supposed to happen next week, will be delayed indefinitely. 

A well operated by BP Exploration Alaska Inc on Alaska’s North Slope is no longer leaking oil after leaks were discovered Friday morning.  The well was venting gas, which caused a spray of crude oil to impact the well pad.

Officials at Iraq’s South Oil Co said repair work at a Basra oil jetty damaged by a tanker collision last month were completed on Sunday.  A one-million barrel vessel was anchored at the berth early on Monday, loading a cargo of light crude. 

According to the EIA, US shale production in May is expected to increase 123,000 bpd to 5.19 million bpd.  In the Permian, oil production is forecast to increase by 76,000 bpd to 2.36 million bpd while in the Eagle Ford region, output is set to increase by 39,000 bpd to 1.22 million bpd.  Production in the Bakken region is forecast to fall by 1,400 bpd to 1.02 million bpd. 

IIR reported that US oil refiners are expected to shut in 586,000 bpd of capacity in the week ending April 21st, increasing available refining capacity by 146,000 bpd in the previous week.  IIR expects offline capacity to increase to 646,000 bpd in the week ending April 28th. 

Early Market Call - as of 9:00 AM EDT

WTI - May $52.43, down 22 cents

RBOB - May $1.7046, down 1.54 cents

HO - May $1.6239, down 89 points


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Oil prices moved higher after IEA report a near balance of global supply and demand

April 17, 2017

Recap: Oil prices moved higher in early trading on Thursday, after the IEA reported a near balancing of global supply and demand for the oil market. However, gains were reversed after fresh data showed a steady climb in U.S. production and after the IEA cut its oil demand growth forecast for 2017 by 40,000 barrels per day. The agency also noted that its revised level of 1.3 million barrels per day may be too optimistic.

May WTI rose 7 cents, or 0.1%, to settle at $53.18 a barrel, up 1.8% on the week. Brent for June delivery added 3 cents or less than 0.1%, to $55.89 a barrel, up about 1.2% for the week.

May RBOB fell 0.4% to $1.735 a gallon, while May heating oil declined 0.2% to $1.650 a gallon.

Fundamental News:  The IEA stated that global demand for oil is finally close to outstripping supply after nearly three years of surplus production, despite growth in the overhang of unused crude.  The agency said oil stocks across the Organization for Economic Cooperation and Development fell by 17.2 million barrels in March.  Over the first three months of the year, stocks were up 38.5 million barrels or 425,000 bpd following a large increase in January.  Overall, OECD stocks fell by 8.1 million barrels in February to 3.055 billion barrels as demand outpaced supply by about 200,000 bpd between January and March.  However, stocks are still 330 million barrels above the five year average.  The IEA cut its forecast for global oil demand growth in 2017 by 40,000 bpd to 1.32 million bpd.  In regards to supply, the IEA said global production fell by 755,000 bpd in March to 95.98 million bpd as OPEC and its partners complied with their joint deal to cut output by 1.8 million bpd in the first half of the year.  For 2017, the IEA expects non-OPEC supply to increase by 485,000 bpd, above its previous estimate of 400,000 bpd, led by increases in US production growth.

Baker Hughes reported that the number of rigs searching for oil in the US increased by 11 to 683 in the week ending April 13th. 

Nigeria’s military said it destroyed 13 illegal refineries in the Niger Delta oil hub.  Military authorities say there are hundreds of illegal refineries in the region, which process stolen crude from oil company pipelines. 

Iraq’s SOMO is expected to ship a total of 99.845 million barrels of Basrah Light and Heavy crude for May.  Basrah Light shipments are expected to total 73.845 million barrels in May compared with 70.13 million barrels in April.  Basrah Heavy crude shipments are expected to total 26 million barrels in May compared with 25 million barrels in April. 

China’s General Customs Administration reported that the country’s crude imports increased to an all-time high in March to 38.95 million tons or 9.17 million bpd.  This is compared with 8.286 million bpd in February and far exceeded an earlier record of 8.57 million bpd in December.  The customs data also showed that refined fuel imports in March increased by 10.2% on the year to 2.7 million tons while exports increased nearly 25% to 4.67 million tons. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp hub in the week ending April 13th increased by 1.28% on the week but fell by 6.57% on the year to 1.109 million tons.  Gasoil stocks fell by 5.95% on the week and by 15.02% on the year to 3.067 million tons while fuel oil stocks fell by 3.64% on the week but increased by 4.32% on the year to 1.112 million tons.  Naphtha stocks fell by 27.54% on the week but increased by 93.86% on the year to 221,000 tons while jet fuel stocks fell by 0.58% on the week and by 12.13% on the year to 681,000 tons. 

Early Market Call - as of 9:00 AM EDT

WTI - May $53.15, down 3 cents

RBOB - May $1.7372, up 23 points

HO - May $1.6461, down 31 points


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Oil market trended higher on support from Saudi Arabia to extend OPEC output cut

April 13, 2017

Recap: The oil market continued to trend higher on Wednesday morning in follow though strength seen on Tuesday.  The market remained supported by the reports that Saudi Arabia favored extending the OPEC output cut agreement beyond its initial six-month term.  The market rallied to a high of $53.76 in early morning trading before it retraced some of its gains ahead of the release of the EIA’s weekly petroleum stock report.  The market was initially supported by the report, which showed an unexpected draw in crude stocks of 2.166 million barrels on the week and larger than expected draws in heating oil and gasoline stocks.  However, the crude market gave up any of its gains and sold off in light of the report showing that US crude production continued to increase.  The report showed that US producers increased their output by 36,000 bpd last week, the eighth consecutive increase in production.  The market traded down to a low of $52.98, where it found some support ahead of the close.  The May WTI contract settled down 29 cents at $53.11.  It later continued to sell off and posted a new low of $52.80.  The June Brent contract settled down 37 cents at $55.86.  Meanwhile, the heating oil market settled up 14 points at $1.6520 while the RBOB market settled down 1.6 cents at $1.7417.

Fundamental News:  OPEC stated that it cut its output in March by more than it pledged under the output cut agreement and added that oil inventories had fallen in February, suggesting that its effort to cut the oversupply is succeeding.  OPEC’s total oil production in March fell by 153,000 bpd on the month to 31.928 million bpd.  OPEC’s 11 members with supply targets cut output to 29.761 million bpd in March, below its 29.804 million bpd target.  However, OPEC raised its forecast for supplies from non-OPEC producers in 2017 as higher oil prices encourage US shale drillers to produce more. 

Iraq and the UAE produced more crude in March than they agreed to produce under the OPEC output cut agreement.  Iraq’s output totaled 4.4 million bpd while the UAE’s output totaled 2.895 million bpd.  Iraq had committed to cut supplies to 4.35 million bpd while the UAE’s target is 2.87 million bpd.  Algeria, Ecuador and Gabon also produced more than allowed by the accord. 

Russia’s Energy Minister, Alexander Novak, said Russia will cut its crude oil production by 300,000 bpd by the end of April.  He plans to meet Russian oil companies in late April to discuss the situation on the global oil market. 

Azerbaijan’s Energy Ministry stated that the country will not attend the monitoring committee meeting between OPEC and non-OPEC oil producing countries in April as the country has not been invited.   
Saudi Aramco is said to have given full contractual supply to Asian customers for May.  In April, Saudi Aramco cut heavier crude over light supplies for some Asian buyers. 

A former Saudi Energy Ministry official, Ibrahim al-Muhanna, said oil prices at around $60/barrel in the next three years and increasing to $70 to $80/barrel in the next decade would rebalance the market.   

Libya’s National Oil Corp has lifted the force majeure on the Wafa oilfield after its closed oil and gas pipelines were reopened.  The oilfield resumed operations after the reopening of a pipeline to the Mellitah processing complex. 

IIR reported that US oil refiners are expected to shut in 732,000 bpd of capacity in the week ending April 14th, increasing the available refining capacity by 284,000 bpd from the previous week.  IIR expects offline capacity to fall to 586,000 bpd in the week ending April 21st. 

Early Market Call - as of 9:00 AM EDT

WTI - May $53.26, up 15 cents 

RBOB - May $1.7389, down 29 points 

HO - May $1.6548, up 30 points 
 

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