Oil prices were supported by a smaller than expected build in U.S. crude oil inventories

Recap: Oil prices bounced on Thursday, supported by a smaller than expected build in U.S. crude oil inventories. Prices had been climbing ahead of the supply data, partly on the back of expectations that efforts by China to stimulate the economy will blunt the hit to crude demand from the country’s coronavirus outbreak. The prospect of a further squeeze on Venezuelan oil exports has also supported prices. April WTI rose as much as 2.2%, to a session high of $54.66 a barrel by 11:00 am EST, but as quickly as it rose, this new spot contract retreated from session highs, and proceeded to trade between the range of $53.80 and $54.10 for the remainder of the session and settled at $53.88 a barrel, up 39 cents or 0.73%. The expiring March contract went off the board at $53.78 a barrel, up 19 cents, or 0.32%. April Brent rose 19 cents, or 0.3%, to $59.31 a barrel. March RBOB rose 0.4% to $1.6697 a gallon, while March heating edged down 0.5% to $1.6976 a gallon.

Technical Analysis:  WTI continued to bounce, as it is still a bit oversold. After bouncing off of unchanged, April WTI broke above $54.00 and closed in on the 50-day moving average. Coming into Friday’s session, we would look for an attempt at breaking above the 50-day moving average, with successful attempts opening up the opportunity for a run at $55.00. To the down side support is set at $53.45 and below that at $52.50.

Fundamental News: The EIA reported that US East Coast refinery utilization rates in the week ending February 14th fell to 59.2%, the lowest level since November 2012.  Meanwhile, US Midwest gasoline stocks increased by 421,000 barrels to 59.2 million barrels on the week, the highest level in a year.

The US Department of Agriculture announced a goal for biofuels to make up 30% of US transportation fuels by 2050.  Refineries are currently required to blend 20.09 billion gallons of biofuels in 2020, about 10% of projected crude oil production, according to the EIA.  President Donald Trump has been criticized by the corn-based ethanol industry after his Environmental Protection Agency granted exemptions to the blend requirement for dozens of oil companies over the last two years.

Russia’s Energy Minister, Alexander Novak, said there was a common understanding among global oil producers that it would now no longer make sense for OPEC and non-OPEC producers to meet before their planned gathering in early March.  He said Russia was still talking to other countries about the situation on the oil market.  OPEC has been trying to persuade Russia to join deeper production cuts.  Russia has stated that it will disclose its stance in the coming days.  He said Russia was still discussing its position and did not say if Russia would support deeper cuts. 

US Federal Reserve Vice Chair, Richard Clarida, said the US economy is showing signs of losing steam in an outlook that showed little alarm about the coronavirus outbreak. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp refining and storage hub in the week ending February 20th fell by 3.31% on the week and by 4.36% on the year to 1.196 million tons.  Gasoil stocks fell by 4.73% on the week and by 7.05% on the year to 2.254 million tons while fuel oil stocks fell by 6.29% on the week but increased by 6.1% on the year to 1.043 million tons. 

Early Market Call - as of 8:30 AM EDT

WTI - Apr $53.06, down 82 cents

RBOB - Mar $1.6384, down 3.13 cents