Recap: The oil market on Monday erased its early gains but remained within last Thursday’s trading range amid the stalemate in U.S.-Iran peace talks. On Saturday, U.S. President Donald Trump rejected an Iranian peace proposal announced last week at the UN General Assembly. However, he said that U.S. negotiators were expected to engage in more talks this week. The crude market held support at its previous lows and extended its gains to $4.13 as it traded to a high of $96.54 early in the morning. The market later erased its gains and extended its losses to $1.16 as it posted a low of $91.25. It retraced some of its losses and settled in a sideways trading range during the remainder of the session. The November WTI contract settled up 19 cents at $92.60 and the November Brent contract settled up 96 cents at $105.78. The product markets ended the session in mixed territory, with the heating oil market settling up 7.06 cents at $4.7553 and the RB market settling down 5.57 cents at $3.3377.
Technical Analysis: The crude market will remain sideways as the market awaits further developments from the ongoing mediated talks between the U.S. and Iran. Qatari mediators are expected to hold separate talks with Iran’s Foreign Minister and with the U.S. side on Monday or Tuesday. The oil market is seen finding resistance at $96.54, $96.78, $97.22, $98.01, $100.61 and $101.69. Meanwhile, support is seen at $91.25 to $91.23, $88.71 and $88.67.
Fundamental News: According to data from the Department of Energy, stocks of crude oil in the U.S. Strategic Petroleum Reserve fell to 283.8 million barrels last week, the lowest level since October 1982.
According to sources, the White House is considering regulatory relief that would allow broader sales of red-dyed diesel as part of an effort to bring down prices, a move that could allow some buyers to avoid the federal fuel tax. The red-dye proposal has emerged from days of administration deliberations as one of the leading alternatives to a diesel export ban, which has been discussed as global supply disruptions drive prices to record levels. President Donald Trump has supported a ban, but that has faced widespread opposition from the oil industry and other parts of the business community. The administration has also been seeking voluntary commitments from major refiners to limit diesel exports. Energy Secretary Chris Wright has contacted executives at several major refiners to gauge their willingness to engage in such an action. A White House official said no final decisions have been made, but the president is weighing all options to lower prices.
Kpler data showed that crude oil exports from key Middle East producers rebounded in September to 12.8 million bpd, the highest level since the U.S.-Israeli war with Iran started in February, as Saudi Arabia and the United Arab Emirates increased their exports. The rebound came following a recovery in exports via the Strait of Hormuz, which were set to hit about 7.4 million bpd this month, as Saudi Arabia diverted oil exports from the Red Sea port of Yanbu following attacks that damaged its East-West Pipeline. According to Kpler, while exports from the region have rebounded, they were still about 6 million bpd down from 18.8 million bpd in February. The region’s top exporter Saudi Arabia was on track to ship about 5.4 million bpd this month, rebounding from 2.446 million bpd in August. September shipments from the Ras Tanura port in the Gulf increased to about 3.6 million bpd from 929,000 bpd in August, but still lower than the 6.411 million bpd recorded in February. A total of 19 very large crude carriers, carrying 2 million barrels of Saudi oil each, exited the Strait of Hormuz last week.
IIR Energy said U.S. oil refiners are expected to shut in about 542,000 bpd of capacity in the week ending October 2nd, increasing available refining capacity by 289,000 bpd. Offline capacity is expected to increase to 622,000 bpd in the week ending October 9th.
Early Market Call – as of 8:45 AM EDT
WTI – Nov $90.63, down $1.97
RBOB – Oct $3.2892, down 4.85 cents
HO – Oct $4.6675, down 8.78 cents
