Recap: Oil prices rallied on Monday after the U.S. and Canada reached a preliminary deal to revise the North American Free Trade Agreement. The agreement eased worries that trade tensions would hamper demand. This comes on the heels of the approaching November 4th date for U.S. sanctions against Iran. Brent rose to a fresh four year high peaking the session at $75.77 a barrel, while WTI traded above $75 a barrel for the first time since June of 2015. December Brent settled at $84.98 a barrel, up $2.05, or 2.72%, while November WTI tacked on $2.05, or 2.80%, to settle at $75.30 a barrel. Both Brent and WTI settled at their highest level in almost four years. November RBOB rose 2% to settle at $2.128 a gallon, while November heating oil gained 2.5% to settle at $2.408 a gallon.
Technical Analysis: WTI traded above $73.96, the 38% retracement of its fall from the 2011 high of $134.12 and the 2016 low of $36.11. With moving average oscillators still trending to the upside, we would look for additional moves higher. Resistance is set at $76.59 and $77.40. Support is set at $73.96 and $72.95.
Fundamental News: Genscape reported Monday morning that it estimated crude oil inventories at Cushing, OK as of Friday, September 28th stood at 27,244,167 barrels up 485,239 barrels from September 25th and up 1,506,205 barrels from a week earlier.
S&P Global Platts reported that stocks of gasoil in Switzerland were falling to unusually low seasonal levels due to the recent low water levels on the Rhine River.
Commerzbank Monday raised up its year end Brent forecast to $85 per barrel.
Genscape reported the Seaway pipeline was shut Monday morning. The line was flowing at near 391,000 b/d and normally has a 400,000 b/d capacity running between Cushing and Freeport, Texas.
U.S. oil refiners are estimated to have 1,360,000 b/d of capacity offline in the week ending October 5th some 131,000 b/d less than a week ago.
On Monday, President Trump announced the United States, Canada and Mexico had reached an agreement on the new United States-Mexico-Canada (USMCA) trade pact that would replace the NAFTA trade pact. The new agreement President Trump claimed would support “hundreds of thousands” of U.S. jobs. The markets saw the announcement as taking away from some of the concerns that a trade war was going to impact growth.
Early Market Call - as of 9:05 AM EDT
WTI - Nov $75.44 up 14 cents
RBOB - Nov $2.1270 down 5 points
HO - Nov $2.4063 down 16 points
View the Sprague Refined Products Market Watch Report in a downloadable pdf format by clicking below.
Click to view more online:
View market updates
View our refined products glossary
Go to SpraguePORT online
This market update is provided for information purposes only and is not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes no representations or warranties with respect to the contents of such news, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible for the consequence of reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact. The views expressed in this material are through the period as of the date of this report and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance or results and actual results or developments may differ materially from those projected. The whole or any part of this work may not be reproduced, copied, or transmitted or any of its contents disclosed to third parties without Sprague’s express written consent.