Recap: The oil market on Friday posted an inside trading day as the market weighed the possibility of a diplomatic resolution between the U.S. and Iran against concerns of continuing attacks against Saudi Arabia by Houthi fighters. On Thursday, sources stated that U.S. and Iranian negotiators were exploring a phased path out of the war that would call for Iran to reopen the Strait of Hormuz and the U.S. lifting its economic blockade of Iran. Iran’s President said it was up to the U.S. to choose when the war will end. The crude market opened at its high of $94.75 and erased some of its previous gains as it traded towards Thursday’s low. The market posted a low of $91.51 and settled in a sideways trading range during the remainder of the session. The November WTI contract settled down $2.20 at $92.41 and the November Brent contract settled down $2.28 at $104.32. The product market also ended the session lower, with the heating oil market settling down 4.56 cents at $4.6847 and the RB market settling down 17.12 cents at $3.3934.
Technical Analysis: The crude market will continue to trade within its recent trading range as the market awaits to see whether there is any diplomatic breakthrough in talks between the U.S. and Iran, with neither side wanting to be the first to surrender its leverage. The oil market is seen finding resistance at $94.75, $96.78, $97.22, $98.08, $99.85 and $100.61. More distant resistance is seen at $1.0108, $101.69, $103.48, $105.63 and $106.75. Meanwhile, support is seen at $91.51, $91.23, $88.71, $88.67, $88.18 and $85.92.
Fundamental News: Kpler data showed that crude flows out of the Strait of Hormuz reached 33.7 million barrels so far in the week starting September 20th. Traffic comprised 19 tankers, of which 17 are very large crude carriers. Most of the tankers are laden with crude from Saudi Arabia followed by Iraq. Preliminary shiptracking data showed that vessel transits at the Strait of Hormuz fell on Thursday to nine, compared with the previous day’s 14. The number of vessels transiting the waterway was also lower than the 10-day average of around 18. Out of these nine, eight ships exited and one entered. Of the eight exits, one was the ballast very large gas carrier and one was a laden very large crude carrier.
Trade sources and analysts said ship-to-ship transfers in the Gulf of Oman for Middle Eastern oil from inside the Strait of Hormuz have reached their limits after Saudi Arabia diverted exports from the Red Sea, adding to shipments from other producers. The increasing amount of Saudi exports this month requires more supertankers to shuttle crude through Hormuz to conduct cargo transfers. That has reduced ship availability, raising shipping costs and increasing the time cargoes are on the water before reaching refineries. State-run Saudi Aramco has sold more than 60 million barrels of crude for STS transfer off Sohar, Oman, this month and next since its East-West Pipeline was attacked on September 13th, halting oil exports from the Red Sea port of Yanbu. Data from analytics firm Kpler showed that Saudi crude exports via Hormuz were on track to rebound to 3.6 million bpd in September, up from about 900,000 bpd in August.
IIR Energy said U.S. oil refiners are expected to shut in about 842,000 bpd of capacity for the week ending September 25th, increasing available refining capacity by 15,000 bpd. Offline capacity is expected to decrease to 622,000 bpd in the week ending October 2nd and further to 690,000 bpd in the subsequent week.
Baker Hughes reported that U.S. energy firms this week added rigs for a third consecutive week for the first time since July. It reported that the total oil and gas rig count increased by four to 599 in the week ending September 25th, its highest level since May 2024. Baker Hughes said oil rigs increased by three to 455 this week, their highest level since mid-August. It said gas rigs increased by one to 135, their highest level since July 2023, and other miscellaneous rigs held at nine.
Early Market Call – as of 9:05 AM EDT
WTI – Nov $94.40, up $1.99
RBOB – Oct $3.3999, up 65 points
HO – Oct $4.8127, up 12.8 cents
