Concerns shifted away from trade wars between China and the U.S. to possible U.S. sanctions against Iran

Recap: Oil prices rose on Monday, stemming three weeks of losses, as concern shifted away from trade wars between China and the U.S. to possible U.S. sanctions against Iran. The focus is now on supply shortages rather than economic growth, which is expected to slow due to the trade wars. October Brent rose to its highest level in four sessions, while the soon to expire September WTI reached a three day high of $66.53. After rising as much as 1.2%, October Brent pared gains to settle at $72.21 a barrel, up 38 cents, or 0.53%. September WTI tacked on 52 cents, or 0.7%, to settle at $66.43 a barrel.  

September RBOB rose 1.7%, to close at $2.0195 a gallon, while September heating oil added 0.7% to close at $2.114 a gallon.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, August 17th increased by 518,866 barrels on the week and by 260,193 barrels from Tuesday, August 14th to 26,712,400 barrels. 

The US Department of Energy is offering 11 million barrels of crude oil for sale from the SPR ahead of sanctions on Iran that are expected to reduce global supplies of crude.  The delivery period for the proposed sale of sour crudes will be from October 1st through November 30th.

The Kremlin said Russia’s President Vladimir Putin still hopes to pull Russia’s ties with the US out of a deep crisis, but it stated that nobody will go into mourning if this ambition is not reciprocated by the US.  The Kremlin’s spokesman, Dmitry Peskov, said the new US sanctions proposals were unfriendly and illegal.

Iran urged Europe to speed up its efforts to save the 2015 nuclear agreement between Iran and the world powers that US President Donald Trump abandoned in May.  European states have been scrambling to ensure Iran gest enough economic benefits to persuade it to stay in the deal.  Britain, France, Germany plus China and Russia say they will do more to encourage their businesses to remain engaged with Iran.  However, the threat of US sanctions has prompted many major companies to pull out of Iran. 

Shell Nigeria recovered over 95% of oil from spill incidents on sections of its Trans Ramos pipeline, which feeds into Nigeria’s Forcados oil export terminal.  The pipeline has been shut for the past month due to leaks.  Although Shell did not state the volume of crude affected due to the closure, the pipeline has a capacity of 100,000 bpd.

North Dakota’s oil production fell nearly 2% in June to 1,225,510 bpd from a record high set in May. 

A 24-hour strike at Total’s Alwyn, Elgin and Dunbar offshore platforms started on Monday morning as planned, according to the Unite union. 

The Joint Organizations Data Initiative reported that Saudi Arabia’s oil output in June increased by 459,000 bpd on the month to 10.489 million bpd.  Saudi Arabia’s oil exports in June increased by 260,000 bpd to 7.24 million bpd.  Its crude stocks fell by 453,000 barrels to 234.917 million barrels in June.  It also reported that its oil product exports increased by 113,000 bpd to 1.999 million bpd in June. 

IIR Energy reported that US oil refiners are expected to shut in 205,000 bpd of capacity in the week ending August 24th, increasing available refining capacity by 221,000 bpd from the previous week.  IIR expects offline capacity to fall to 107,000 bpd in the week ending August 31st. 

Early Market Call – as of 8:50 AM EDT

WTI – Sep $67.34, up 90 cents

RBOB – Sep $2.0301, up 1.56 cents

HO – Sep $2.1310, up 1.74 cents

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