The U.S. decided to end waivers for buyers of Iranian crude oil

Recap: Oil prices rose to fresh six month highs after OPEC members said they would raise output only if demand warranted it. This comes on the heels of a U.S. decision to end waivers for buyers of Iranian crude oil. June WTI, the new spot month contract, rose $1.05, to a high of $66.60 a barrel by 11:16 a.m. EDT, the highest level for a spot contract since October 31. June Brent tacked on 69 cents, to a session high of $74.73 a barrel, Brent’s highest level since November 1. Prices retreated on light profit taking, with June WTI falling 50 cents to a mid-session low of $66.10 a barrel, and June Brent falling 53 cents to a mid-session low of $64.20. On a slight rebound, June WTI settled at $66.30 a barrel, up 75 cents, or 1.14 percent with June Brent adding 47 cents, or 0.63 percent, to settle at $74.51 a barrel. May RBOB rose less than 0.1% to $2.132 a gallon and May heating oil climbed by 0.7% to $2.118 a gallon.

Technical Analysis: WTI continued to gather strength above $65.35, the 62% retracement set by the December low of $43.70 and the October high of $78.74. We would look for continued strength above this level, with attempts to test $67.50. Support is set at $64.39 and below that at $63.22.

Fundamental News: Iran’s parliament passed a bill on Tuesday requiring the government take firm steps to respond to terrorist actions by US forces, retaliating against the US’ blacklisting of Iran’s Revolutionary Guards. 

Iran’s Oil Minister, Bijan Zanganeh, said the US has made a bad mistake by politicizing oil and using it as a weapon.  He said the US will not achieve its dream of cutting Iran oil exports to zero. 

White House economic adviser, Larry Kudlow, said that President Donald Trump’s decision to tighten US sanctions on Iranian oil will not result in higher oil prices. 

The IEA said global oil markets are adequately supplied and spare production capacity remained at comfortable levels, while highlighting the need to avoid higher oil prices. 

China’s Foreign Ministry on Tuesday formally complained to the US over its decision to end waivers on sanctions on Iranian oil imports, adding another fault line to already complicated US-China relations. 

Saudi Arabia’s Foreign Minister, Ibrahim al-Assaf, welcomed a US decision to end all Iran sanction waivers by May, saying it was a necessary step to halt Iran’s “destabilizing” policy in the region.  He reiterated a statement issued by Saudi Arabia’s Energy Minister that the country would coordinate with other oil producers to ensure an adequate crude supply and balanced markets.

Goldman Sachs expects the US’ decision to end waivers from sanctions on imports of Iranian oil to have a limited impact on prices, even though the timing of the halt is much more sudden than expected. 

Operator Aiteo said a fire at Nigeria’s oil exporting Nembe Creek Trunk Line reported on Sunday has been completely extinguished.  The company declared force majeure and closed the 150,000 bpd pipeline over the weekend.  Investigations on the cause of the fire are ongoing, but Aiteo said it suspected sabotage.  Royal Dutch Shell said operations continued at the Bonny Light terminal but did not state whether the NCTL closure had impacted exports.  Shell pumps a large amount of Bonny Light crude through the NCTL.   

According to the latest Platts OPEC survey, Venezuela’s oil output in March averaged 740,000 bpd, a 16-year low, due to power outages and sanctions.

Early Market Call - as of 8:25 AM EDT

WTI - June $66.25, down 5 cents

RBOB - May $2.1057, down 2.59 cents

HO - May $2.1090, down 88 points