Recap: The oil market posted an inside trading day on Wednesday as the market weighed the new sanctions imposed on a network of shipping companies and vessels smuggling Iranian crude against the expectations that OPEC+ producers will consider another increase in production targets in October. The crude market posted a high of $65.72 in overnight trading as the market remained supported by the new sanctions on Iran. However, the market sold off sharply on news that OPEC+ producers may consider further raising oil production at a meeting on Sunday, as the group seeks to regain market share. The oil market extended its losses to $1.87 as it posted a low of $63.72 early in the afternoon. The market remained range bound ahead of the close. The October WTI contract settled down $1.62 at $63.97 and the November Brent contract settled down $1.54 at $67.60. The product markets ended the session lower, with the heating oil market settling down 1.35 cents at $2.3609 and the RB market settling down 3.08 cents at $2.012.
Technical Analysis: The crude market on Thursday will likely retrace some of its losses in light of the draws expected in the latest weekly petroleum stocks reports. However, its gains will be limited by the expectations that OPEC+ producers will consider another increase in output at its meeting on Sunday. Resistance is seen at $65.72, $66.03, $66.56 and $68.46. Meanwhile, support is seen at $63.72, $63.66, $63.35, $63.10, $62.95, $62.52, $61.83, $61.65, $61.45 and $61.29.
Fundamental News: U.S. President Donald Trump said he plans to speak with Russian President Vladimir Putin in the next few days about ending the war in Ukraine. Earlier, Russian President Vladimir Putin said that an invitation was “on the table” for U.S. President Donald Trump to visit Russia, but there were no preparations for such a trip at the moment. Separately, Russian President Vladimir Putin said that he is ready to meet with Ukrainian President Volodymyr Zelenskiy in Moscow but said it remained to be seen whether such a meeting was worthwhile. He said that in his view Ukraine needed to cancel martial law, hold elections, and hold a referendum about territorial questions if progress was to be made. On Wednesday, Russian President Vladimir Putin told Ukraine that there was a chance to end the war in Ukraine via negotiations “if common sense prevails”, an option he’d prefer, but that he was ready to end it by force if that was the only way.
Ukrainian President Volodymyr Zelenskiy called for more pressure on Russia on Wednesday, beginning a visit to European allies he hopes will unveil plans for security guarantees for Kyiv even as Russian forces launched their latest massive air attack. Russia attacked with more than 500 drones and dozens of missiles across Ukraine, hitting energy and transport infrastructure at 14 sites and injuring four railway workers. Ukraine’s President Zelenskiy called on allies to provide air defenses. Separately, Russia’s Defense Ministry said that its troops had attacked Ukraine’s fuel and transport infrastructure used for military purposes.
Sources stated that OPEC+ will consider further raising its oil production at a meeting on Sunday, as the group seeks to regain market share. OPEC+ has reversed its strategy of output cuts from April and has already raised quotas by about 2.5 million bpd or about 2.4% of world demand, to increase market share and under pressure from U.S. President Donald Trump to lower oil prices. Another output increase would mean OPEC+ would be starting to unwind a second layer of cuts of about 1.65 million bpd or 1.6% of world demand, more than a year ahead of schedule. Eight OPEC+ countries are due to hold an online meeting on Sunday expected to decide on October output. There is also a chance that OPEC+ could pause the increases for October. An OPEC+ source said the final decision has not been made.
Early Market Call – as of 8:45 AM EDT
WTI – Oct $63.24, down 53 cents
RBOB – Oct $2.0150, up 69 points
HO – Oct $2.3139, down 2.81 cents
