Recap: The crude market on Friday ended the session lower after weighing concerns over supplies amid the continuing attacks on vessels transiting through the Strait of Hormuz and the hopes of a de-escalation in the war against Iran. The market continued to retrace its previous losses and posted a high of $92.53 in overnight trading. However, the market erased its gains and sold off to a low of $89.07 amid the news that Qatar’s Emir spoke with President Trump to discuss Qatar’s mediation efforts towards an agreement to end the regional crisis. There are also signs of increased supply, which is pressuring the market, as spot premiums for Middle Eastern crude benchmarks returning to levels reached before the conflict began earlier this year. The oil market later settled in a sideways trading range during the remainder of the session. The December WTI contract ended the session up 31 cents at $90.83 and the January Brent contract ended the day up 3 cents at $98.32. The product markets settled in mixed territory, with the heating oil market settling down 2.02 cents at $4.3317 and the RB market settling up 1.33 cents at $2.7767.
Technical Analysis: The oil market will remain in its recent trading range as it weighs the possibility of a de-escalation and reports of increased supply against the uncertainty of President Trump’s next move in the war. As previously stated, while President Trump said earlier this week that he has no immediate plans to strike Iran, he can easily make the decision to do otherwise. The crude market is seen finding resistance at $92.53, $93.66, $95.82, $97.15, $97.98 and $98.82. Meanwhile, support is seen at $89.07, $86.65, $86.00, $85.28, $83.15 and $82.08.
Fundamental News: U.S. President Donald Trump said his administration would do a lot of things over the next couple of weeks.
Ali Bagheri Kani, the deputy head of Iran’s top security body, said Iran is not satisfied with “paper commitments” and must see practical U.S. steps before the launch of any new diplomatic efforts. On Thursday, a senior Iranian official said Iran has submitted a nuclear proposal to Washington through Qatar. The official said the United States was reviewing it but discussions would depend on Washington first meeting Tehran’s seven demands. These include sanctions relief, access to frozen assets and war reparations, while Washington insists nuclear issues must feature in initial talks.
Iranian media, citing the Islamic Revolutionary Guard Corps, said that Iranian air defenses destroyed a US MQ-1 drone over Qeshm Island in the Strait of Hormuz.
The United Kingdom Maritime Trade Operations agency said the master of a tanker crossing the Strait of Hormuz reported an explosion at the vessel’s port-side waterline, 16 nautical miles east of Oman’s Khasab. UKMTO said the tanker remains under its own power and is continuing its voyage.
IIR Energy said U.S. oil refiners are expected to shut in about 86,000 bpd of capacity in the week ending November 6th, increasing available refining capacity by 323,000 bpd. Offline capacity is expected to decrease to 80,000 bpd in the week ending November 13th and further to 46,000 bpd in the week ending November 20th.
Enbridge Inc. expects its Mainline crude oil pipeline system to remain in apportionment for the foreseeable future.
Early Market Call – as of 8:25 AM EDT
WTI – Dec $87.77, down $3.05
RBOB – Dec $2.7067, down 7 cents
HO – Dec $4.2725, down 5.75 cents
