The Market Remained Pressured by Concerns that the U.S. May Not Be Able to Refill its SPR in the Short Term

Recap:  The oil market on Friday continued to trade lower in follow through selling from Thursday’s session. The market remained pressured by concerns that the U.S. may not be able to refill its SPR in the short term, after U.S. Energy Secretary, Jennifer Granholm, said that refilling the stockpile would be difficult this year and may take several years. The oil market posted a high of $70.38 in overnight trading before it continued to trend lower. The market sold off to a low of $66.82 in early morning trading as it retraced more than 62% of its move from a low of $64.36 to a high of $71.67. The market was also pressured by banking stocks falling earlier in Europe with Deutsche Bank and UBS Group selling off on concerns that the banking issues have not yet been contained. The sell-off in the oil market was also fueled by the increase in the dollar against other currencies. However, the oil market bounced off its low and retraced most of its earlier losses as it traded back over the $69.00 level. It settled in a sideways trading pattern ahead of the close. The May WTI contract settled down 70 cents or 1% at $69.26 and the May Brent contract settled down 92 cents or 1.21% at $74.99. The product markets were mixed once again, with the heating oil market settling up 1.05 cents at $2.6952 and the RB market settling down 1.74 cents at $2.5885.

Technical Analysis:  The oil market is seen remaining within its recent trading range from about $64 to $72, barring any major news over the weekend. The market is seen finding initial resistance at $68.86 followed by its high of $70.38 and $71.67. More distant resistance is seen at $72.71, $74.67 and $75.02. Meanwhile, support is seen at its lows of $66.82 and $64.36, followed by $62.31, $61.74 and $60.00.

Fundamental News:  Refinitiv analysts said that estimates for March loadings from northwestern Europe are currently at 1.29 million tons, which is still quite low in historical terms. February loading totaled 2.17 million tons. Meanwhile, according to Refinitiv analysis, diesel exports to Europe are expected to reach 7.43 million tons in March, up from 5.8 million tons in February.  

U.S. energy firms this week added oil and natural gas rigs for a second consecutive week for the first time since November. Baker Hughes reported that the oil and gas rig count increased by four to 758 in the week ending March 24th. U.S. oil rigs increased by four to 593 this week, up for the first time in six weeks, while gas rigs held steady at 162.

IIR Energy reported that U.S. oil refiners are expected to shut in about 1,206,000 bpd of capacity in the week ending March 31st, increasing available refining capacity by 27,000 bpd. Offline capacity is expected to increase to 1,393,000 bpd in the week ending April 7th.

Exxon Mobil Corp reported that operations require flaring at its 369,024 bpd Beaumont, Texas refinery.

French Energy Minister, Agnes Pannier-Runacher, said fuel shipments resumed early Friday from TotalEnergies Gonfreville refinery in Normandy after police intervened to disperse refinery workers holding a blockage. Police freed access to the refinery early Friday morning so that requisitioned staff could go to work. She said some 15% of French petrol stations were experiencing disruptions, adding 10 fuel depots out of 200 were still blocked.

A TotalEnergies’ spokesperson said 31% of the company’s operational staff at its French refineries and depots were on strike Friday morning.

Early Market Call - as of 8:40 AM EDT

WTI - May $70.71, up $1.45

RBOB - April $2.6171, up 2.86 cents