New data showed that U.S. crude inventories fell more than expected

Recap: Oil was little changed on Friday, steadying near three-month highs after new data showed U.S. crude inventories fell far more than expected, while upbeat economic data and optimism over a U.S.-China trade deal fueled a year-end stock market rally. February WTI rose 4 cents, or less than 0.1%, to end at $61.72 a barrel in up-and-down trade. The slight gains, however, helped the most-active contract hold around its highest price since Sept. 16, with a weekly gain of about 2.1%. February Brent meanwhile, added 24 cents, or 0.4%, at $68.16 a barrel following a 1.1% gain in the prior session. That contract expires on Dec. 30. March Brent, which is currently the most active, added 11 cents, or 0.2%, to settle at $66.87 a barrel. For the week, Brent’s February contract climbed 3.7%, while March Brent rose 2.6% in the week to date. February RBOB shed 0.5% to end at $1.7447 a gallon, producing a weekly decline of 2.2%. February heating oil meanwhile, gave up less than 0.1%, to settle at $2.0519 a gallon. For the week, heating oil gained 1.5%.

Technical Analysis: February WTI edged closer to $62.08 the 50% retracement provided by the April high of $72.90 and the October low of $51.27. Based upon a weekly spot continuation chart, this is the third week straight that WTI remains above the symmetrical triangle it broke out of. The projected upside objective of this breakout is $63.64. Should it get above and settle over $62.08, we would look for a run at the aforementioned objective. To the downside, support is set at $60.80 through $60.48 and below that at $59.53.

Fundamental News: Baker Hughes reported that the number of rigs searching for oil in the week ending December 27th fell by 8 to 677. 

The EIA reported that US crude oil stocks fell more than expected as refineries increased their output.  Crude inventories fell by 5.5 million barrels in the week ending December 20th to 441.4 million barrels, exceeding the 1.7 million barrel decline.  Refinery runs increased by 418,000 barrels on the week.  Overall utilization increased to 93.3% as refiners increased their output.  It increased to the highest level since September.

Russia’s Energy Minister, Alexander Novak, said OPEC and its allies, known as OPEC+, may consider wrapping up their oil output reduction in 2020.  He praised the cooperation between OPEC and non-OPEC producers, saying that global oil markets are currently more or less stable.  He said that the oil demand may increase in the summer when more fuel is required by motorists.  Separately, Russia’s Energy Minister stated that oil production in Russia is expected to be between 555 million tons and 565 million tons or between 11.12 million bpd and 11.32 million bpd in 2020.   

Loadings at Libya’s western Zawiya oil port are continuing normally despite a missile landing nearby.  Libya’s National Oil Corp said the missile strike caused no casualties or damage. 

IIR Energy reported that US oil refiners are expected to shut in 45,000 bpd of capacity offline in the week ending December 27th, increasing available refining capacity by 43,000 bpd from the previous week.  Offline capacity is expected to remain at 45,000 bpd in the week ending January 3rd, and rise to 263,000 bpd in the week ending January 10th.

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp refining and storage hub in the week ending December 27th increased by 23.33% on the week but fell by 22.1% on the year to 994,000 tons.  Gasoil stocks increased by 1.09% on the week and by 16.67% on the year to 2.401 million tons, while its fuel oil stocks increased by 6.71% on the week but fell by 14.38% on the year to 923,000 tons. 

Early Market Call - as of 10:40 AM EDT

WTI - Feb $61.93, up 22 cents

RBOB - Jan $1.7455, down 57 points

HO - Jan $2.0596, up 86 points