Recap: The oil market traded lower on Monday amid some skepticism that U.S.-China trade deal framework would increase demand for oil and expectations that OPEC+ will make another increase of about 157,000 bpd at its meeting this coming weekend. On Sunday, U.S. Treasury Secretary Scott Bessent said the U.S. and China agreed to a framework for a trade deal that could avoid 100% U.S. tariffs on Chinese goods and achieve a deferral of China’s rare-earth export controls in trade discussions this week. The oil market was more skeptical of a possible trade deal than the equities market, which rallied to new highs. The crude market opened higher and quickly traded to a high of $62.17. However, the market sold off to a low of $60.67 in overnight trading. The market later bounced off its low and retraced most of its losses as it traded back towards the $62.00 level by mid-day. The market later erased some of its gains and settled in a sideways trading range ahead of the close. The December WTI contract ended the session down 19 cents at $61.31 and the December Brent contract settled down 32 cents at $65.62. The product markets ended the session in mixed territory, with the heating oil market settling up 3.3 cents at $2.4361 and the RB market settling down 23 points at $1.9204.
Technical Analysis: The crude market is seen remaining in its recent trading range as the market remains supported by the renewed sanctions on Russia from the U.S. while it awaits for further developments on the U.S.-China trade deal. U.S. President Donald Trump is scheduled to meet with China’s President Xi Jinping on Thursday. The market will also focus on the upcoming OPEC meeting, with sources stating that the OPEC+ producers are leaning towards making another modest increase in output. The market is seen finding resistance at $62.17, $62.59, $62.80, $64.86 and $65.77. Meanwhile, support is seen at $60.67, $60.06, $59.64, $59.28, $58.49, $57.73 and $57.34.
Fundamental News: Sources stated that eight OPEC+ nations are leaning towards making another modest increase in oil output for December when they meet on Sunday as Saudi Arabia pushes to reclaim market share. Two sources said the group was likely to agree on Sunday to increase December output targets by another 137,000 bpd, while the other two sources gave no estimate. The producer group most recently decided to raise targets by 137,000 bpd for November.
U.S. President Donald Trump said that Russian President Vladimir Putin should end the war in Ukraine instead of testing a nuclear-powered missile, adding that the U.S. had a nuclear submarine positioned off Russia’s coast. On Sunday, Russia’s President said that Russia had successfully tested its nuclear-powered Burevestnik cruise missile, a nuclear-capable weapon Moscow says can pierce any defense shield, and will move towards deploying the weapon. On Saturday, Reuters reported that the Trump administration has prepared additional sanctions it could use to target key areas of Russia’s economy if Putin continues to delay ending Moscow’s war in Ukraine.
U.S. President Donald Trump said he hoped to add a trade deal with China to a number of pacts he has already struck during a visit to Asia this week. President Trump announced deals with four Southeast Asian countries during the first stop in Malaysia and will conclude his trip in a summit with Chinese President Xi Jinping on Thursday. U.S. officials said negotiators from the world’s top two economies agreed on a framework on Sunday for a deal to pause steeper American tariffs and Chinese rare earths export controls.
IIR Energy reported that U.S. oil refiners are expected to shut in about 981,000 bpd of capacity in the week ending October 31st, increasing available refining capacity by 111,000 bpd.
Early Market Call – as of 8:50 AM EDT
WTI – Dec $60.26, down $1.27
RBOB – Nov $1.9081, down 2.05 cents
HO – Nov $2.3981, down 4.08 cents
