The Oil Market Ended its Streak of Losses With a Small Gain of 0.2%

Recap:  The oil market ended its streak of losses with a small gain of 0.2% but was still more than 2% lower for the week, as it remained under pressure from weak economic data from major economies released on Wednesday and ahead of a speech from U.S. Federal Reserve Chairman Jerome Powell on Friday. The crude market posted the day’s trading range by mid-morning, with a high of $79.28 posted early in the morning before it sold off to a low of $77.59. The oil market later bounced off its low and traded back towards its high before settling in a sideways trading range during the remainder of the session. The October WTI contract settled up 16 cents at $79.05 and the October Brent contract settled up 15 cents at $83.36. The product markets ended the session in positive territory, with the heating oil market settling up 2.73 cents at $3.1564 and the RB market settling up 1.12 cents at $2.78.

Technical Analysis:  The oil market is seen trading mostly sideways as it awaits for any insight into the potential path for interest rates from Fed Chair Jerome Powell’s speech on Friday at the Fed’s Jackson Hole Symposium. Technically, the crude market is seen remaining in its downward trend as stochastics ae still pointing lower and the market remains in its downward trend channel. The market is seen finding support at its low of $77.59, $76.27, $76.16 and $75.79. Meanwhile, resistance is seen at its high of $79.28, $79.91, $80.37 and $81.75.

Fundamental News:   Global oil inventories have declined sharply, with OPEC+ production cuts and increased demand starting to affect the supply of crude. According to Kpler, worldwide onshore stocks were estimated at about 3.37 billion barrels as of Wednesday, down 60 million barrels on the month. Much of the decline was seen in China. U.S. inventories have also been falling steadily.

According to Citigroup, OPEC’s core members may need to consider further production cuts as some of the group’s most troubled nations achieve unexpected supply growth. It said the “fragile five” of Iran, Iraq, Libya, Nigeria and Venezuela will add about 900,000bpd of production this year and at least the same in 2024. It said that is enough to satisfy coming growth in oil demand. The five countires are all showing positive signs of supply recovery, while growth in oil demand will be constrained by fading expansion in China. Citigroup’s head of commodities research, Ed Morse, said Saudi Arabia and its Persian Gulf allies may face pressure to cut output further. 

Colonial Pipeline Co is allocating space for Cycle 50 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee. Colonial Pipeline Co is allocating space for Cycle 50 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.

Federal Reserve Bank of Philadelphia President, Patrick Harker, sees interest rates on hold for the rest of the year and thinks policymakers have likely undertaken sufficient tightening, stating that we’ve probably done enough.

Federal Reserve Bank of Boston President, Susan Collins, said the central bank may be in a place where it does not need to raise rates again, while keeping open the option for more action.

Early Market Call - as of 8:35 AM EDT

WTI - October $80.06, up $1.01

RBOB - September $2.7966, up 1.66 cents

HO - September $3.2108, up 5.44 cents