Crude oil futures advanced for the second straight week

Recap: Crude oil futures reversed course on Friday to advance for the second straight week, as prices gained on upbeat trade talks between the U.S. and China. Both Brent and WTI rose to fresh highs for the year, posting their highest level since November 2018. Brent for April delivery gained as much as 0.98 percent, topping the session at $67.73, while April WTI peaked at $57.81, a gain of 1.4 percent. Gains were limited by yesterday’s EIA report, which showed U.S. stockpiles reaching record levels. April WTI settled at $57.26 a barrel, up 30 cents, or 0.53 percent, for a weekly gain of about 3%. April Brent added a mere 5 cents, or 0.07 percent, to settle at $67.12 a barrel, for a weekly gain of 1.3%, its second weekly gain in a row. March RBOB was 0.32 cents, or 0.2%, lower at $1.6112 a gallon, with a weekly gain of 2.4%, its fourth straight such rise. Meanwhile, March heating oil shed 0.52 cent, or 0.3%, to settle at $2.0311 a gallon. For the week, it gained 0.5%.

Technical Analysis: Based upon a weekly spot continuation chart, WTI finished the week above $57.05, the 38% retracement set by the October high of $79.20 and the December low of $43.36. With moving oscillators for this chart trending higher in neutral territory, we would look for continued higher moves, but with caution. The next upside target is $58.90. Support is set at $57.05 and below that at $56.65.

Fundamental News: Baker Hughes reported that the number of rigs searching for oil in the week ending February 22nd fell by 4 to 853. 

IIR Energy reported that US oil refiners are expected to shut in 1.77 million bpd of capacity in the week ending February 22nd, increasing available refining capacity by 31,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.26 million bpd in the week ending March 1st and to 1.08 million bpd in the following week.

Genscape reported that crude inventories in West Texas fell this week to the lowest level in four months after a converted pipeline began transporting crude from the country’s largest shale oil field to the US Gulf Coast.  The drop in storage in the Permian Basin is another sign that new pipelines out fo the region have started to alleviate a crude bottleneck.  Crude inventories in the Permian Basin fell to 15 million barrels in the week ending February 19th, the lowest since October and down from a record 22 million barrels in November.   

Saudi Aramco has finished repairs at part of its Safaniyah offshore oilfield, allowing full output to resume after a main power cable was cut by a vessel’s anchor.  The field was partially shut down more than two weeks ago due to the incident.  Safaniyah is the largest offshore oilfield in the world, with a capacity of more than 1 million bpd.  It produces heavy crude oil. 

Britain’s Unite union said its members voted in favor of industrial action at Total’s Elgin-Franklin, Shetland Gas Plant, North Alwyn and Dunbar platforms.  The dispute centers on proposals to change shift patterns and a change in pay structure.

In its semi-annual monetary policy report to Congress, the Federal Reserve said that the US economy maintained solid growth through the second half of 2018, likely expanding just under 3% for the year. 

CNBC reported that China agreed to buy up to $1.2 trillion in goods from the US as part of the current negotiations to end the trade war between the countries.  It also reported that President Donald Trump and China’s President Xi Jinping could meet in late March in Florida.  Negotiators have been meeting in Washington this week, with President Donald Trump scheduled to talk with China’s Vice Premier Liu He on Friday afternoon, in hopes of coming closer to a trade deal before the March 1st deadline for a deal expires and triggers higher US tariffs of 25% from the current 10%. 

Early Market Call - as of 8:05 AM EDT

WTI - Apr $55.88, down $1.37

RBOB - Mar $1.5740, down 3.87 cents

HO - Mar $2.0020, down 2.94 cents