The Market Traded Sideways in Overnight Trading

Recap:  The oil market posted an outside trading day as the market, which looked to have taken a breather early in the session after two previous down days, continued on its downward path and sold off sharply in afternoon trading. The market traded sideways in overnight trading and posted a low of $76.16. However, the market bounced off that level as it held support at its previous low of $76.11 and retraced some of its previous losses. The market rallied to a high of $78.06 by mid-morning on a weaker dollar. The dollar fell after data showed that U.S. jobless claims increased more than expected last week. While this may raise hopes that a softening labor market will reduce the likelihood of the Federal Reserve reaccelerating the pace of its rate hikes, the latest weekly report will have no bearing on the February payroll report that the Federal Reserve will consider when making a rate decision at its next meeting. The crude market’s gains were limited and erased its earlier gains as traders remained concerned about the Fed Chair’s warning of higher interest rates. The market extended its losses to $1.10 as it posted a low of $75.56 ahead of the close. The April WTI contract settled down 94 cents at $75.72 and the May Brent contract settled down $1.07 at $81.59. The WTI contract traded lower in the post settlement period, posting a low of $75.45. The product markets settled lower, with the heating oil market settling down 7.3 cents at $2.6689 and the RB market settling down 8.38 cents at $2.6051.

Technical Analysis:  The crude market will seek further direction from the release of the February payrolls report on Friday as it will give some insight on the likelihood of the Federal Reserve increasing the pace of its interest rate hikes. Technically, the oil market is seen trading lower, with its stochastics still trending lower. The market is seen finding support at its low of $75.45, $74.99, $74.09, $73.83-$73.80 and $73.52. More distant support is seen at $72.25. Meanwhile, resistance is seen at $76.52, $77.05, $77.52 and $78.06. Further upside is seen at $78.15, $78.89, $80.24, $80.94, followed by $82.48 and $82.64.

Fundamental News:  Russian Foreign Minister, Sergei Lavrov, said during a press conference with his Saudi counterpart that they had confirmed consistent implementation of commitments under OPEC+. Meanwhile, Saudi Foreign Minister Prince Faisal bin Farhan Al Saud said Saudi Arabia is coordinating closely with Russia on energy markets and is committed to the OPEC+ agreement between OPEC and its allies.

The Financial Times reported that the U.S. has privately urged some commodity traders to help move price-capped Russian oil in a bid to keep supplies stable. It reported that Treasury officials met executives and traders at Trafigura and Gunvor among others and offered reassurances over expanding their role in Russian crude and fuels trade without breaching western restrictions.

TC Energy’s Chief Executive, Francois Poirier, said oil flows on its Keystone pipeline will not change after the Pipeline and Hazardous Materials Safety Administration said it would require the company to reduce pressure following a 13,000 barrel oil spill in Kansas in December. He said Keystone has already been operating within the requirements of the new order. The PHMSA said it would require TC Energy to reduce operating pressure on more than 1,000 additional miles of Keystone.

Colonial Pipeline Co is allocating space for Cycle 16 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.

Early Market Call - as of 8:15 AM EDT

WTI - April $74.88, down 84 cents

RBOB - April $2.5877, down 1.74 cents