The EIA reported a steep drop in U.S. crude oil stocks

Recap: Crude oil prices received a double boost on Wednesday after the EIA reported a steep drop in U.S. crude oil stocks and from suggestions by Saudi Arabia that OPEC’s production cuts could be extended into the second half of 2019. The bullish EIA report showed U.S. crude oil inventories increased 8.6 million barrels, much larger than the expected 4 million barrel increase. April WTI rose by as much as 3.4 percent to a session high of $57.39 a barrel, while Brent for April delivery rose 2.2 percent, reaching a high of $66.70 a barrel. Gains were slightly pared with April WTI settling at $56.94 a barrel, up $1.44, or 2.59%, while April Brent gained $1.18, or 1.81%, to settle at $66.39 a barrel. March RBOB rose 3% to $1.634 a gallon and March heating tacked on 1.2% to $2.022 a gallon.

Technical Analysis: WTI held below significant resistance set at $57.50, while moving oscillators continue to trend sideways in over bought territory. Given this scenario, we would expect continued sideways activity. Should the spot contract break above $57.50, the next level of resistance is set at the 200-day moving average of $59.28. To the downside, support is $55.00 and below that at $53.96.

Fundamental News: Saudi Energy Minister Khalid al-Falih said on Wednesday that OPEC and its partners are “taking it easy” as they take a slow and measured approach to boost oil prices. The oil minister said oil producers are interested in market stability first and foremost. He said the kingdom plans further curbs in its production in March.

OPEC’s Secretary General said on Wednesday that President Trump was welcome to join a dialogue on balancing supply and demand in the global oil market. He said the United States, as the world’s biggest oil producer, has a strategic stake in supply and demand globally.

Venezuela’s Oil Minister on Wednesday claimed that its oil production and exports are not diminished by U.S. sanctions on the country. He claimed that production is currently at 1.5 million b/d and exports are at 1.2 million b/d.

Russia’s Energy Ministry plans to meet domestic oil companies on March 1st to discuss a deal between OPEC and other leading global oil producers to reduce production. 

Reuters reported that workers at Libya’s El Sharara oilfield are ready to resume production with an initial output of 80,000 b/d but are still waiting for approval from state oil firm NOC. The 315,000 b/d oil field has been closed since December.  A spokesman for Libya’s National Oil Corp said that there was no technical obstacle to restarting the oilfield but added that security was the issue.    

Lundin Petroleum said it expects its Norwegian Luno II oilfield which will start production in 2021 will have a gross plateau production of 20,000-30,000 b/d.

Bloomberg reported that oil producers in Alberta have found a way around production limits recently imposed upon them by the provincial government.

Ecuador reportedly is producing some 536,000 b/d, some 508,000 b/d above its OPEC+ production quota.

Nigeria’s state oil company NNPC said the country’s current oil production stands at about 1.8 million bpd, in addition to 400,000 bpd of condensates. 

IIR Energy reported that US oil refiners are expected to shut in 1.41 million bpd of capacity in the week ending March 1st, increasing available refining capacity by 433,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.01 million bpd in the week ending March 8th. 

Early Market Call - as of 8:05 AM EDT

WTI - Apr $56.95, up 1 cent

RBOB - Mar $1.6333, down 7 points

HO - Mar $2.0219, up 3 points