Recap: The oil market on Wednesday traded higher on the news that India could gradually reduce its purchases of Russian oil as part of a trade deal with the United States. The market was also supported by the news that the summit between U.S. President Donald Trump and Russian President Vladimir Putin was put on hold. The market was also digesting the news of the U.S. seeking to buy 1 million barrels of oil for the SPR. The crude market traded sideways in overnight trading, posting a low of $57.34. However, the market continued to trend higher, extending its gains to $1.10 to a high of $58.92 by mid-day in light of the EIA report showing draws across the board as refining activity and demand strengthened. The oil market later settled in a sideways trading range ahead of the close. The December WTI contract settled up $1.26 at $58.50 and the Brent contract settled up $1.27 at $62.59. In the post settlement period, the oil market rallied to a new intraday high of $59.83 in light of the news that the U.S. is set to announce more U.S. sanctions targeting Russia late Wednesday or early Thursday. Meanwhile, the product markets settled higher, with the heating oil market settling up 4.38 cents at $2.2496 and the RB market settling up 3.97 cents at $1.8650.
Technical Analysis: The oil market is seen trading within its recent trading range from around $56 to $62 as it remains supported by the risk of supply disruptions. The market will remain headline driven as traders await an announcement on the new U.S. sanctions targeting Russia after the EU approved a 19th package of sanctions against Russia, which added 117 more vessels to Russia’s shadow fleet, bringing the total to 558. The market will also look for further updates on the possible reduction in Russian oil imports by India, the summit between President Trump and Russia’s President to discuss the end of Russia’s war in Ukraine and a U.S.-China trade deal. The oil market is seen finding resistance at $59.83, $59.90, $61.18 and $62.34. Further resistance is seen at $62.47, $62.80 and $64.86. Meanwhile, support is seen at $57.34, $56.35, $55.96, $55.30 and $54.81.
Fundamental News: Indian media outlet, Mint reported that India and the United States are nearing a trade agreement that would reduce U.S. tariffs on Indian imports to 15% to 16% from 50%. The deal may see India gradually scale back its imports of Russian oil.
A planned summit between U.S. President Donald Trump and Russian President Vladimir Putin was put on hold on Tuesday, as Russia’s rejection of an immediate ceasefire in Ukraine cast a cloud over attempts at negotiations. According to two U.S. officials and two other sources, Russia reiterated its long-standing terms for a peace deal in a private communique known as a “non-paper” that it sent to the U.S. last weekend. The communique reaffirmed Russia’s demand for full control of the long-contested eastern Donbas region, effectively rejecting President Trump’s call for a ceasefire to commence with a freeze of the frontlines at their prevailing locations. European leaders called on Washington on Tuesday to hold firm in demanding an immediate ceasefire in Ukraine, with present battle lines to serve as the basis for any future talks.
The Kremlin said that the dates of a summit meeting between President Vladimir Putin and U.S. President Donald Trump had yet to be set, and added that neither Putin nor Trump wanted to waste time.
European Union diplomatic sources said the European Union’s 19th package of sanctions against Russia will list four companies involved in China’s oil industry that circumvent Western restrictions.
IIR Energy reported that U.S. oil refiners are expected to shut in about 1.1 million bpd of capacity in the week ending October 24th, increasing available refining capacity by 196,000 bpd. Offline capacity is expected to fall to 981,000 bpd in the week ending October 31st.
Early Market Call – as of 8:20 AM EDT
WTI – Dec $61.52, up $2.14
RBOB – Nov $1.9252, up 4.21 cents
HO – Nov $2.3707, up 8.49 cents
