Saudi Arabia Was Extending its Voluntary Output Cut of 1 Million Bpd by One Month to the End of September

Recap:  The oil market rallied higher on Thursday following the news that Saudi Arabia was extending its voluntary output cut of 1 million bpd by one month to the end of September. The oil market traded mostly sideways overnight before further selling, in follow through from Wednesday’s sell off, pushed the market to a low of $78.69 after breaching its previous low and the lower boundary of its upward trending channel at $79.05. The market later retraced some of its losses following the Saudi announcement that it was once again extending its voluntary output cut. The market was also well supported by the news that Russia was extending its export cuts of 300,000 bpd into September. The crude market continued to trend higher, rallying over $2.30 as it posted a high of $81.86 ahead of the close. The September WTI contract settled up $2.06 at $81.55, while the October Brent contract settled up $1.94 at $85.14.  The product markets ended in mixed territory, with the heating oil market settling up 7.06 cents at $3.0749 before it rallied to a high of $3.0907 in the post close session and the RB market settled down 1.11 cents at $2.7647.

Technical Analysis:  The oil market on Friday will continue on its upward trend. While the OPEC+ Joint Ministerial Monitoring Committee is scheduled to hold a meeting on Friday and no change in OPEC+’s output policy is expected, the market will remain supported by the Saudi and Russian announcements. The crude market is seen finding resistance at its high of $81.68, $82.43 and $84.40. Meanwhile, support is seen at $79.90, $79.50, its low of $78.69, $78.55 and $78.29. More distant support is seen at $76.64, $76.44, $75.69 and $74.85.

Fundamental News:   The state news agency SPA said Saudi Arabia will extend a voluntary oil output cut of one million bpd for another month to include September. The agency cited an official source at the ministry of energy as saying the cut can be "extended, or extended and deepened". The source said Saudi Arabia’s production for September will be approximately 9 million bpd. The source said "This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets." Meanwhile, a panel from OPEC+, which includes members OPEC and allies led by Russia, is meeting on Friday.

White House national security spokesman, John Kirby, said the United States will continue to work with producers and consumers to ensure the energy market promotes growth after Saudi Arabia's decision to reduce oil production.

Russia’s Deputy Prime Minister, Alexander Novak, said Russia will cut oil exports by 300,000 bpd in September. He said Russia will continue to voluntarily reduce its oil supply in the month of September to ensure the oil market remains balanced.

Colonial Pipeline Co is allocating space for Cycle 46 on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. The current allocation is for the pipeline segment north of Collins, Mississippi.

Canadian Natural Resources Ltd expects the Trans Mountain expansion pipeline begin the line fill as soon as August. It expects the line fill to require up to 5 million barrels of oil.

Diesel flows into Europe in July reached a six-month high of 7.13 million tons, up from 6.38 million tons in June. August arrivals so far stand at 1.77 million tons. Meanwhile, exports from northwestern Europe to the U.S. in July stood at about 1.06 million metric tons.

Early Market Call - as of 8:15 AM EDT

WTI - September $81.84, up 30 cents

RBOB - September $2.8106, up 4.59 cents