Recap: The oil market posted gains for the sixth consecutive week of 2.78% as it remained in its upward trending channel. The market on Friday remained well supported by the announcements made by Saudi Arabia and Russia pledging to continue cutting their output through September. Saudi Arabia extended its output cuts by 1 million bpd to the end of September, while Russia also decided to cut its oil exports by 300,000 bpd next month. The outcome of the OPEC+ Joint Ministerial Monitoring Committee meeting was no surprise to the market, yielding no additional changes to output policy. The crude market opened 18 cents higher and posted a $1.73 trading range from $81.51 to $83.24, as it breached its resistance at Wednesday’s high of $82.43. This followed an over $3 trading range posted in the previous two sessions. The market later settled in a sideways trading range ahead of the close. The September WTI contract settled up $1.27 at $82.82, while the October Brent contract settled up $1.10 at $86.24. Meanwhile, the product markets ended mixed, with the heating oil market settling down 1.27 cents at $3.0622 and the RB market settling up 1.84 cents at $2.7831.
Technical Analysis: While the market may see some retracement of its gains as its daily stochastics remain in overbought territory, the oil market is still seen remaining in its upward trend channel. The market will remain well supported by the Saudi and Russian pledge to continue cutting their output. The crude market is seen finding resistance at its high of $83.24, $83.53 and $84.85. Meanwhile, support is seen at $81.51, $79.96, $78.69, $78.55, $78.29 and $77.14.
Fundamental News: Two sources stated that the Joint Ministerial Monitoring Committee kept oil output policy unchanged at its meeting on Friday. An OPEC statement issued following the online meeting, said "The committee will continue to closely assess market conditions." It added that the panel urged members to achieve full compliance with output cut pledges. This follows Saudi Arabia’s announcement on Thursday that it will extend a voluntary oil output cut of one million bpd for another month to include September, adding it could be extended beyond that or deepened. Russia’s Deputy Prime Minister, Alexander Novak, said shortly after the Saudi announcement that Russia will also cut oil exports by 300,000 bpd in September. The Joint Ministerial Monitoring Committee will hold its next meeting on October 4th.
Russian Deputy Prime Minister, Alexei Novak, said global oil demand is set to increase by 2.4 million bpd this year, and strong demand makes the market balanced. He said Russia’s oil output remains steady at about 9.5 million bpd. He said the OPEC+ deal in June was implemented by more than 100% and added that Russia was fully committed to the deal.
Baker Hughes reported that U.S. energy firms this week cut the number of oil rigs operating for an eighth consecutive week. It said the combined oil and natural gas rig count fell by five to 659 in the week ending August 4th, the lowest since March 2022. That was also the 13th time in the last 14 weeks that drillers cut rigs. U.S. oil rigs fell by four to 525 this week, falling for an eighth consecutive week to their lowest since March 2022, while gas rigs held steady at 128.
IIR Energy reported that U.S. oil refiners are expected to shut in about 318,000 bpd of capacity in the week ending August 4th, increasing available refining capacity by 30,000 bpd. Offline capacity is expected to fall to 155,000 bpd in the week ending August 11th before increasing to 161,000 bpd in the week ending August 18th.
Colonial Pipeline Co is allocating space for Cycle 46 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.
Early Market Call - as of 9:05 AM EDT
WTI - September $82.19, down 63 cents
RBOB - September $2.8085, up 2.49 cents
HO - September $3.0665, up 43 cents
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