Recap: The oil market retraced some of its previous losses and ended the session higher, with the November WTI contract going off the board at the close. The market traded higher on easing concerns about an oversupplied market and slowing economic growth resulting from an escalation in the U.S.-China trade dispute. The crude market traded mostly sideways in overnight trading before some short covering pushed the market to $58.27, where it held some resistance before it erased its gains and sold off to a low of $56.99 by mid-morning. The market later bounced off its low and traded back over the $58.00 level and posted a high of $58.28. The oil market later erased some of its gains and traded sideways ahead of the close. The November WTI contract settled up 30 cents at $57.82, while the December WTI contract settled up 22 cents at $57.24. The December Brent contract settled up 31 cents at $61.32. The product markets ended the session in mixed territory, with the heating oil market settling up 1.37 cents at $2.2058 and the RB market settling down 49 points at $1.8253.
Technical Analysis: The crude market on Wednesday will be driven by the weekly petroleum stocks reports, which are expected to show builds in crude stocks of about 800,000 barrels. The market will also look to headlines for further direction as questions remain whether the Hamas and Israeli ceasefire will hold and whether the summit between the U.S. and Russian presidents will take place anytime soon to discuss the end of Russia’s war in Ukraine. Technically, its daily stochastics are trending sideways. The oil market is seen finding support basis the December contract at $56.35, $55.96, $55.30 and $54.81. Meanwhile, resistance is seen at $58.08, $58.39, $58.63, $58.86, $58.93, $59.14, $59.39, $59.69, $59.88 and $61.18.
Fundamental News: The U.S. Department of Energy said it is looking to buy 1 million barrels of crude oil for delivery to the Strategic Petroleum Reserve, as it seeks to take advantage of relatively low oil prices to help replenish the stockpile.
Bloomberg News reported European nations are working with Ukraine on a 12-point proposal to end Russia’s war along current battle lines. The report said a peace board chaired by U.S. President Donald Trump would oversee the implementation of the proposed plan.
The Kremlin said that the timing of a potential summit between Vladimir Putin and Donald Trump was unclear and that no dates had been mentioned.
Earlier, CNN reported that U.S. President Donald Trump’s hopes for a quick summit in Budapest with Russian President Vladimir Putin may be stalled after a preparatory session between the leaders’ top foreign-policy aides this week was put on hold.
S&P Global Commodities at Sea estimates that for the week ending October 19th some 688,200 mt of gasoil/diesel was exported from India, up 42% from the previous week. Some 35% of these exports were headed to Europe.
Goldman Sachs expects Brent crude prices to decline further next year, reaching $52/barrel in the fourth quarter. It said the next substantial decline in prices may take time to materialize for two reasons. It said first, larger than seasonal OECD commercial builds in November are likely already priced in and it expects January to be the next month with accelerating OECD commercial stocks builds of 1.7 million bpd and second, continuing strength in diesel refining margins supports refining runs and crude demand. Goldman Sachs said they still see more downside risks to Russian production from internal challenges and from Ukraine attacks on Russia’s energy infrastructure than from increasing pressure on global demand for Russian oil.
UBS expects oil prices to stabilize around current levels. However, it added that prices could come under pressure if trade tensions escalate further. It believes the oil market is oversupplied but not to the extreme that IEA is currently forecasting.
Early Market Call – as of 8:30 AM EDT
WTI – Dec $58.43, up 85 cents
RBOB – Nov $1.8572, up 2.96 cents
HO – Nov $2.2388, up 3.33 cents
