Oil Futures Opened Friday's Session Trading to the Upside but Quickly Turned Lower

Recap: Oil futures opened Friday’s session trading to the upside but quickly turned lower after other Western nations planned to join the U.S. in releasing oil from strategic reserves. The International Energy Agency -- whose members include the U.S., most of Europe, Canada, Mexico, Japan and South Korea -- said it would announce the amount of the release early next week. The IEA said its members have 1.5 billion barrels of oil in reserve. It was indeed a turbulent week for oil prices, as the market continued to react to the Russian invasion of Ukraine, the announcement of the release of oil from strategic reserves, and a surprising 3.4 million barrel drop in U.S. crude oil inventories. Friday’s session saw a loss of $1.01, or 1.01%, to settle at $99.27 a barrel in May WTI, a weekly loss of $14.63, or 12.84%, the largest net decline for a front month contract since May 6, 2011. Brent for May delivery fell 32 cents, or 0.31%, to $104.39 per barrel, down $12.98, or 11.06% on the week. Front month heating oil finished the session up 6.31 cents, or 1.88%, to settle at $3.4240 per gallon, but lost 32.72 cents, or 8.72% this week. Spot RBOB ended up 0.26 cents, or 0.08%, to settle at $3.1535 a gallon, down 28.28 cents, or 8.23% on the week.

Technical Analysis:  WTI ended the week below the lower line on the symmetrical triangle and on par with the 50-day moving average. With slow stochastics crossing to the down side, we expect to begin the week trading lower, with an attempt to test $98.27, the 50% retracement provided by the March high of $130.50 and the December low of $66.04. There is support set at $94.85 and below that at $93.53. Resistance is set $101.10 and above that at $105.26.

Fundamental News:  The U.S. Energy Department issued a notice of sale of crude oil from the SPR on Friday, a day after President Joe Biden announced the largest release ever from the U.S. strategic reserve.  It said the first 90 million barrels of oil would be released between May and July, while another 90 million barrels will be released between August and October.

Japan's Industry Ministry said member countries of the International Energy Agency concluded an extraordinary meeting aimed at stabilizing oil markets in the wake of Russia's invasion of Ukraine.  It reported that IEA countries committed to another coordinated oil release and added that volumes and timing of the second release could be agreed within a week. Earlier, ahead of a meeting by IEA member countries, the Japanese Industry Minister said Japan will act appropriately on oil reserves release while closely watching global developments.

Baker Hughes reported Friday afternoon that U.S. drillers added oil and gas rigs for the second week in a row. Oil drillers added 2 rigs on the week to reach 533 operating rigs up from just 196 rigs operating a year ago. Natural gas drillers added one rig on the week raising the total rigs operating to 138 rigs. Overall the Permian basin saw the largest gains with 4 rigs added on the week.

According to a Reuters report, OPEC's increased oil output in March fell short of its target under a deal with allies, as outages in African members partly offset increases by Saudi Arabia and other top producers. It reported that OPEC produced 28.54 million bpd in March, up 90,000 bpd from the previous month but short of the 253,000 bpd increase called for under its deal with allies including Russia. OPEC's compliance with pledged cuts increased to 151% in March, up from 136% in February.

IIR Energy reported that U.S. oil refiners are expected to shut in 1.012 million bpd of capacity in the week ending April 1st, cutting available refining capacity by 25,000 bpd. Offline capacity is expected to increase to over 1.2 million bpd for the week ending April 8th but then fall to 965,000 bpd for the week ending April 15th.

Early Market Call - as of 8:35 AM EDT

WTI - May $101.92, up $2.64

RBOB - May $3.2132, up 5.83 cents