Recap: The crude market ended the session lower on Wednesday as the market weighed continued Middle East oil supply risks against the news that IEA members expressed their support to accelerate the release of about 100 million barrels of oil stocks to the market that was pledged in March. Yemen’s Houthis attacked the Aden international airport with ballistic missiles and explosive-laden drones on Wednesday, as fighting between the Iran-aligned group and Saudi-backed government forces intensified, increasing fears of regional supply disruptions. The oil market traded higher in overnight trading, posting a high of $90.98 on the continuing geopolitical risks and ahead of the release of the EIA’s weekly petroleum stocks report. The market later retraced its early gains and sold off to a low of $87.96 ahead of the close in light of the IEA news. The November WTI contract settled down $1.16 at $88.28 and the December Brent contract settled down 38 cents at $100.20. The product markets ended the session in mixed territory, with the heating oil market settling up 5.33 cents at $4.6227 and the RB market settling down 3.9 cents at $3.2342.
Technical Analysis: The oil market will continue to trend in its sideways trading range as it remains supported by the continuing conflict in the Middle East and the fears of regional supply disruptions. While there have been recent increases in supply and exports from the Middle East, there are concerns that it may not be sustainable as Iran has threatened to close transit routes in the Strait of Hormuz that it deems illegal. The market will also keep watch for updates on Tropical Storm Isaias as it heads for the oil producing region in the Gulf. The crude market is seen finding support at $87.96, $86.86, $85.92, $84.24, $82.47 to $82.17. Meanwhile, resistance is seen at $90.92, $91.88, $92.53, $93.51, $93.68, $94.28, $94.74 and $96.02.
Fundamental News: The International Energy Agency agreed on Wednesday to accelerate the release of oil stocks and to prioritize diesel supplies under a plan launched in March. The IEA said completing previously announced releases as quickly as possible could bring around 100 million barrels to market, although analysts and some governments said the figure did not necessarily represent a new intervention of that size. The statement from the IEA followed an agreement by G7 countries on Friday to release 100 million barrels of crude and diesel, which raised expectations of additional oil stock releases. The G7 move came after President Donald Trump warned he might ban U.S. diesel exports if they did not put more of the fuel into the market. The IEA, launched a 400-million-barrel release program in March to counter shortages and rising prices caused by the Iran war, although not all of those volumes have yet reached the market. IEA members are scheduled to assess and review the plans at a board meeting next week.
UBS raised its December oil price forecasts by $5/barrel. It sees Brent crude reaching $100/barrel and WTI reaching $96/barrel by year-end.
According to the Marine Minerals Administration, U.S. Gulf of Mexico oil and gas producers shut in about 25.08% of current oil production and 16.37% of current natural gas production as of Wednesday, as operators responded to Tropical Storm Isaias. The regulator said personnel had been evacuated from eight production platforms, representing 2.16% of the 371 manned platforms in the Gulf of Mexico. It also said personnel had been evacuated from two non-dynamically positioned rigs, equivalent to 18.8% of the 11 rigs of that type currently operating in the Gulf.
IIR Energy said U.S. oil refiners are expected to shut in about 636,000 bpd of capacity in the week ending October 9th, decreasing available refining capacity by 70,000 bpd.
Early Market Call – as of 9:05 AM EDT
WTI – Nov $92.23, up $3.95
RBOB – Nov $3.3528, up 11.86 cents
HO – Nov $4.7933, up 17.06 cents
