Recap: The oil market on Friday posted an inside trading day and ended with a second consecutive weekly gain amid the de-escalation of the U.S.-China trade tensions, with a 90-day pause on their trade war. The market’s gains, however, have been limited by increased supply expectations from OPEC+ and Iran. The market erased some of the week’s early gains on the prospect of an Iranian nuclear deal, although there are questions as to how much more crude would come onto the global market. The crude market traded to a low of $61.25 in overnight trading before it retraced its early losses and posted a high of $62.71 by mid-day. The market later traded in a sideways trading range ahead of the close. The June WTI contract settled up 87 cents at $62.49 and the July Brent contract settled up 88 cents at $65.41. The product markets ended the session in mixed territory, with the heating oil market settling down 2.54 cents at $2.1406 and the RB market settling up 74 points at $2.1418.
Technical Analysis: The market is seen remaining in its sideways trading range as stochastics are pointing sideways. The market is also still awaiting further developments on several fronts, with the U.S. continuing its trade deal negotiations and talks continuing between the U.S. and Iran on a possible nuclear deal. The market is seen finding support at its low of $61.25, $60.47, $59.89, $59.68, $58.64, $57.74 and $57.03. Meanwhile, resistance is seen at its high of $62.71, $62.91, $63.68, $63.90-$63.92, $64.87, $65.29 and $66.41.
Fundamental News: Turkey’s Foreign Minister, Hakan Fidan, said Ukrainian and Russian officials who held direct talks in Istanbul on Friday agreed in principle to meet again for negotiations aimed at reaching a ceasefire. The talks between Russian and Ukrainian negotiators in Istanbul ended after around two hours. It was their first direct peace talks in more than three years of war. Turkish Foreign Minister Hakan Fidan and the head of the MIT intelligence agency, Ibrahim Kalin, also attended the talks. Earlier on Thursday, Turkish Foreign Minister Hakan Fidan said that it was critical to achieve a Russia-Ukraine ceasefire as soon as possible.
According to monthly data from North Dakota’s Industrial Commission, oil production in North Dakota increased by 28,000 bpd to 1,193,000 bpd in March.
Baker Hughes said U.S. energy firms this week cut the number of oil and natural gas rigs operating for the third consecutive week for the first time since mid-April. It reported that the oil and gas rig count fell by two to 576 in the week ending May 16th, the lowest level since January. Baker Hughes said oil rigs fell by 1 to 473 this week, their lowest level since January, while gas rigs fell by 1 to 100, its first decrease since early April.
IIR Energy reported that U.S. oil refiners are expected to shut in about 717,000 bpd of capacity in the week ending May 16th, increasing available refining capacity by 562,000 bpd. Offline capacity is expected to fall to 246,000 bpd in the week ending May 23rd and to 174,000 bpd in the week ending May 30th.
An environmental rights group said Nigeria’s 450,000 bpd Trans Niger Pipeline, a major pipeline transporting crude from onshore oilfields to the Bonny export terminal, burst and spilled oil into the local B-Dere community in Ogoniland.
Nigeria’s Renaissance Energy said it had halted production into the country’s Trans Niger oil pipeline following an operational incident.
Early Market Call – as of 8:40 AM EDT
WTI – Jun $62.26, down 23 cents
RBOB – Jun $2.1237, down 1.68 cents
HO – Jun $2.1332, down 72 points
