EIA reported that crude stocks fell by 4.948 million barrels on the week

Recap: The oil market settled in positive territory for the fourth consecutive session after rallying to its highest level since December 8, 2014 on tightening global crude stocks and after OPEC members said they would continue to cut their production despite the gains in oil prices.  On Wednesday, the EIA reported that crude stocks fell by 4.948 million barrels on the week.  The market was also well supported ahead of a US decision on whether to extend temporary waivers on sanctions against Iran.  US President Donald Trump is set to review whether to waive or reimpose sanctions on Iran this week, a decision that could impact Iran’s oil exports.  The crude market posted a low of 63.43 and traded mostly sideways in overnight trading before it breached its previous high and rallied to $64.77 by mid-morning.  The market later settled in a sideways trading pattern before it erased all of its earlier gains and sold off back towards the $63.50 level ahead of the close.  The February WTI contract settled up 23 cents at $63.80, while the March Brent contract settled up 23 cents at $63.80.  The product markets were mixed, with the heating oil market settling down 40 cents at $2.0767 and the RBOB market settling up 43 points at $1.8370. 

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, January 9th fell by 3,574,438 barrels on the week and by 2,710,934 barrels from Friday, January 5th to 46,144,499 barrels. 

The UAE’s Energy Minister, Suhail al-Mazrouei, said OPEC will continue to cut its output during the rest of the year.  He said he was not concerned with the current oil price.  He said there was an oversupply of about 100 million barrels in the market, adding that the market still needed to reduce oil inventories to their five-year average.  He said OPEC would continue monitoring oil supply growth in the US and that in order to meet oil demand growth, the market needed shale oil supply.  He also stated that he was not worried about a supply shock due to the crude output declines in Venezuela and political unrest in Iran.

While OPEC may get the credit for the longest winter decline in US crude stocks in a decade, other factors are also cutting inventories, including strong refining margins, frigid temperatures and high foreign demand.   

According to administration officials, US President Donald Trump plans to extend waivers on sanctions against Iran mandated under the 2015 nuclear deal while preparing new sanctions targeting human rights and cyber violations allowed under the agreement.  They stressed that no final decision had been made and said the administration’s plans could change at any time.

Total oil product stocks in the Amsterdam-Rotterdam-Antwerp refining and storage hub increased by 13% in the week ending January 11th to 5.74 million tons.  Gasoline stocks increased by 26.83% on the week but fell by 0.09% on the year to 1.092 million tons while gasoil stocks increased by 14.76% on the week but fell by 9.83% on the year to 2.652 million tons and fuel oil stocks increased by 10.22% on the week and by 42.96% on the year to 1.035 million tons.

The Norwegian Petroleum Directorate said Norway’s oil and gas investments will begin to increase in 2018 after falling for the last four years.  By 2022, combined output volume of oil and gas from the country’s fields could approach levels last seen in 2004, the highest on record.  Norway’s combined output of oil and gas is expected to reach 4.4 million bpd of oil equivalents in 2022, up 10% from the forecast 4 million bpd of oil equivalents seen for 2018. 

Early Market Call – as of 9:00 AM EDT

WTI – Feb $63.44, down 37 cents

RBOB – Feb $1.8354, down 16 points

HO – Feb $2.0743, down 20 points

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