Recap: The oil market sold off sharply on Monday amid hopes of a peace deal in the Middle East. Over the weekend, U.S. President Donald Trump announced plans for “massive attacks” on Iran, only to cancel them at the last minute. President Trump said talks with Iran were expected to take place on Monday afternoon. The crude market gapped lower on the opening on Sunday evening from $81.06 to $80.10 but quickly backfilled the gap as it posted a high of $81.30. The market held its resistance at that level and gradually traded to a low of $78.43 by mid-morning despite Iran denying that there were talks underway with the U.S. Iran said there were no plans for any meetings, contradicting President Donald Trump’s comments. The market later settled in a sideways trading pattern during the remainder of the session. The August WTI contract settled down $4.33 at $80.34 and the Brent contract settled down $4.16 at $83.77. The product markets ended the session lower, with the heating oil market settling down 24.43 cents at $3.8772 and the RB market settling down 25.49 cents at $2.9667.
Technical Analysis: The crude market will continue to trend sideways as the market awaits for further news on the possible talks between the U.S. and Iran. While President Donald Trump has continued to state that talks with the U.S. and Iran are going well, Iran has repeatedly denied that the two countries are currently in talks or planning talks. The oil market is seen finding support at $78.43, $77.78, $77.39, $77.20, $72.51 and $70.68. The crude market is seen finding resistance at $81.30, $82.91, $86.87 followed by $92.83 and $93.50.
Fundamental News: Ship tracking data showed that U.S. oil exports in July fell to 3.66 million bpd, the lowest level in eight months, , as a short-lived peace deal between the U.S. and Iran in June briefly flooded markets with Middle Eastern oil and diminished demand for American crude abroad. The share of U.S. oil exports to Asia fell to about 40% in July from 52% in June, with top buyers including Japan and South Korea taking fewer shipments. Shipments to Europe also fell to about 1.7 million bpd in July from as much as 2.5 million bpd in May. Exports of crude oil released from the U.S. government’s Strategic Petroleum Reserve also slowed, totaling just 31,000 bpd in July.
U.S. President Donald Trump accused ExxonMobil and Chevron of making “too much money” off higher fuel prices and said the oil giants should “give some of that back to the public”.
IIR Energy reported that U.S. oil refiners are expected to shut in about 103,000 bpd of capacity in the week ending August 7th, increasing available refining capacity by 85,000 bpd. Offline capacity is expected to decrease to 48,000 bpd in the week ending August 14th.
The U.S. Environmental Protection Agency granted a Delek US Holdings refinery full exemption from federal biofuel blending requirements for 2024 while declaring hardship waiver petitions for two refineries owned by HF Sinclair ineligible.
Exxon reported emissions at its 612,000 bpd Beaumont, Texas refinery due to a process unit upset.
Motiva Enterprises returned the second-largest crude distillation unit at its 656,400 bpd Port Arthur, Texas, refinery to normal operation after a brief electrical power interruption on Friday. The power blip shut a 200,000 bpd VPS-4 crude distillation unit out of production on Friday, triggering the plant’s safety flare. Motiva also reported that it plans to begin the restart of an 81,000 bpd fluidic catalytic cracking unit at the refinery on Wednesday after completing repairs.
Early Market Call – as of 8:35 AM EDT
WTI – Sep $77.83, down $2.23
RBOB – Sep $2.8806, down 7.83 cents
HO – Sep $3.7706, down 8.78 cents
