Recap: Oil prices were mixed on Monday, with Brent coming under pressure and WTI holding close to unchanged, while both experienced narrow trading ranges. December WTI hovered close to the $57 level for most of the session, while January Brent traded just above $63 a barrel for the bulk of the session. Spot WTI settled at $56.76 a barrel, up 2 cents, or 0.04%, while January Brent fell 36 cents, or 0.57%, to settle at $63.16 a barrel.
December RBOB fell 1.95 cent, or 0.01%, to $1.7929 a gallon, while December heating oil declined 0.028 cents, or 0.14%, to end at $1.9321 a gallon.
Fundamental News: Distillate flows to Northwest Europe and the Mediterranean from the US Gulf Coast for November arrival total about 1.2 million metric tons, according to cFlow, S&P Global Platts trade flow software. It was the first time the flow exceeded 1 million metric tons since Hurricane Harvey in late August.
OPEC increased its forecasts of demand for its crude in 2018, signaling the rebalancing of the global market could gather pace. OPEC raised its estimates for the amount it will need to pump to meet demand next year by 400,000 bpd to 33.4 million bpd. OPEC said its output in October totaled 32.59 million bpd, a decline of about 150,000 bpd from September. The OPEC production figure means compliance with the supply cut by the 11 members bound by the output targets has increased over 100% from 98% initially reported in September. In a further sign that supply excess is easing, OPEC said inventories in developed economies fell by 23.6 million barrels in September to 2.985 billion barrels, 154 million barrels above the five year average. OPEC expects oil demand to increase by 1.51 million bpd next year, up 130,000 bpd from a previous estimate, to 98.45 million bpd.
OPEC’s Secretary General, Mohammad Barkindo, said the oil market is rebalancing at a quickening pace and production cuts are the only viable option to restore stability. He said OPEC and non-OPEC producers are committed to continue their efforts until market stability is achieved. He said he welcomes more oil producers to join the supply cut pact.
Two OPEC ministers said OPEC and non-OPEC producers are moving towards deciding whether to extend the agreement to cut oil supply further into 2018 at the November 30th meeting. The UAE’s Energy Minister, Suhail Al Mazrouei, said he saw no need for the decision to be delayed beyond the November 30th meeting. He believes OPEC and non-OPEC producers will continue to make whatever decision it takes to stabilize the market at the upcoming meeting. Meanwhile, Oman’s Oil Minister, Mohammed bin Hamad al-Rumhi, said he is confident there will be an agreement among global oil producers later this month to extend output cuts. Oman’s current production is 968,000 bpd and the country is abiding by its quota.
The EIA reported that US shale production for December is expected to increase for a 12th consecutive month. Total shale output is estimated to have increased by more than 80,000 bpd to 6.17 million bpd.
IIR reported that US oil refiners are expected to shut in 646,000 bpd of capacity in the week ending November 17th, increasing available refining capacity by 443,000 bpd from the previous week. IIR expects offline capacity to fall to 524,000 bpd in the week ending November 24th.
Early Market Call - as of 9:00 AM EDT
WTI - Dec $56.52, down 24 cents
RBOB - Dec $1.7764, down 1.66 cents
HO -Dec $1.9234, down 91 points
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