The U.S. government reported a weekly decrease in domestic crude supplies

Recap: Trading was mixed on Wednesday, with WTI trading higher in early trading before the U.S. government reported a weekly decrease in domestic crude supplies, the first in three weeks, but the decline was smaller than the market expected, and as a result WTI slipped. Brent opened the session higher and held on to early gains. October WTI was trading at $56.86 a barrel, up 73 cents shortly before the supply data, but fell upon the release of the report. The October Brent was up $1.03 at $61.06 a barrel, but slipped 26 cents after the numbers were released, but managed to maintain gains. WTI continued to slide throughout the session, while Brent held onto early gains. October WTI settled at $55.68 a barrel, down 45 cents, or 0.80%. The EIA on Wednesday reported that U.S. crude supplies fell by 2.7 million barrels for the week ended August 16. That followed increases in each of the previous two weeks. Analysts polled expected a decline of 3.1 million barrels, while the API on Tuesday reported a 3.5 million-barrel decrease. Gasoline stocks rose by 312,000 barrels, while distillate supplies grew by 2.6 million barrels. September RBOB rose 1.3 cents, or 0.8%, to $1.6938 a gallon, while September heating oil added nearly half a cent, or 0.2%, to $1.8573 a gallon.

Technical Analysis: October WTI rose toward $57.34, the 200-day moving average, but failed to reach it. With this spot contract building a base around $55.25, we would look for buyers to become active on bounces off of this level, with continued attempts to take out the 200-day moving average. Above this level, additional resistance is set at $58.01. Breaks below $55.25 open up the opportunity for a run at $54.00. 

Fundamental News:  Iran’s President, Hassan Rouhani, said if Iran’s oil exports are cut to zero, international waterways will not have the same security as before.  He made his comments during a meeting with Supreme Leader Ayatollah Ali Khamenei. 

Meanwhile, Iran’s Foreign Minister, Mohammad Javad Zarif, said Iran may act “unpredictably” in response to the US’ “unpredictable” policies under US President Donald Trump.  He said Gulf Arab states should not seek to “buy security from outside” and denounced sending naval forces to the Gulf.  So far, Britain, Australia and Bahrain have joined the US-led security mission to protect merchant vessels travelling through Middle East waterways. Separately, Iran’s Foreign Minister said that Iran would continue its commitment to the nuclear non-proliferation treaty.

IIR Energy reported that US oil refiners are expected to shut in 59,000 bpd of capacity in the week ending August 23rd, increasing available refining capacity by 155,000 bpd from the previous week.  Offline capacity is expected to remain unchanged at 59,000 bpd in the week ending August 30th. 

Euroilstock reported that European refinery production in July increased by 6.1% on the month but fell by 3.4% on the year to 10.813 million bpd. 

Greece’s Deputy Foreign Minister, Miltiadis Varvitsiotis, said the country will not facilitate an Iranian tanker sailing in the Mediterranean to deliver oil to Syria.  Meanwhile, Iran’s state news agency, IRNA, reported that an Iranian oil tanker has broken down in the Red Sea but the crew are safe and repairs are underway. 

The Abu Dhabi National Energy Co said its Iraq-based unit had set a “production record” from the Atrush oilfield in the northern Kurdistan region.  It said that for the first time since the field started operations in July 2017, the total monthly production volume exceeded 1 million barrels of oil in July. 

Early Market Call - as of 8:20 AM EDT

WTI - Oct $56.08, up 41 cents

RBOB - Sep $1.6985, up 58 points

HO - Sep $1.8604, up 31 points