Recap: The oil market traded higher on Tuesday, settling higher for the third consecutive session, as hopes for U.S.-Iranian peace deal fade, with Iran stating that it would adopt a more offensive stance and the U.S. ruling out extending a ceasefire. U.S. President Donald Trump on Tuesday, said that talks between Washington and Tehran were neither taking place nor scheduled, while he insisted that the Strait of Hormuz remained open. The crude market posted the day’s trading range by mid-morning as it posted a high of $85.94 amid the comments made by President Trump. However, the market gave up some of its gains and posted a low of $84.57 before it settled in a narrow trading range during the remainder of the session. The September WTI contract settled up 44 cents at $84.94 and the October Brent contract settled up 15 cents at $91.02. The product markets ended the session higher, with the heating oil settling up 1.3 cents at $4.4501 and the RB market settling up 3.16 cents at $3.3017.
Technical Analysis: The crude market will remain supported as progress on peace talks and the resumption of oil tanker traffic through the Strait of Hormuz appear to have stalled, given the recent rhetoric. However, its gains will remain limited as long as the situation in the Strait of Hormuz does not worsen, with Saudi Aramco resuming oil loadings inside the Strait of Hormuz and is offering cargoes for loading via ship to ship transfers off Fujairah in the UAE. The oil market is seen finding resistance at $85.94, $86.14 followed by $86.87 to $87.68 and $92.83 and $93.50. Meanwhile, support is seen at $84.57, $81.50, $80.71, $80.09, $77.79, $76.53, $74.57 and $74.24.
Fundamental News: According to preliminary shipping data, ship crossings via the Strait of Hormuz were still in single digits on Monday, despite increasing slightly from the weekend. Kpler shiptracking data showed that six commodity ships transited the strait on Monday, of which three were exiting the Gulf and three were entering, compared with the 10-day average of 11 ships. Three ships transited on Saturday while two moved through the waterway on Sunday. Kpler data showed that at Bab el-Mandeb, 19 commodity vessels transited on Monday, lower than a 10-day moving average of 26 and Sunday’s 33 crossings. Out of the 19 ships, five were entering the Red Sea and 14 were exiting. Of the 14 exits, one was the VLCC Norns laden with 2 million barrels of oil. Of the ships entering, two were the liquid tankers Admiral and Portofino, with the Portofino loaded with diesel bound for west of Suez markets.
Bloomberg reported that BP Plc has become the latest foreign company to begin trading Venezuelan oil since the U.S. removed former President Nicolas Maduro, following in the footsteps of Trafigura Group and Vitol Group. The tanker Monte Lema finished loading fuel oil for BP on Tuesday. The ship, carrying 400,000 barrels of heavy fuel oil, lists Houston as its preliminary final destination. The fuel oil is being supplied by state oil company Petroleos de Venezuela SA.
According to three industry executives, tanker trackers and a ship broker, two Chinese shipping giants have stopped sending oil tankers through two Middle East chokepoints amid ongoing conflict and are instead collecting oil cargoes outside the Gulf. According to Vortexa and a ship broker, state-controlled COSCO Shipping Energy Transportation and China Merchants Energy Shipping have kept their tankers out of the Strait of Hormuz and Bab al-Mandeb since late July, with security concerns curbing oil shipments to the world’s largest importer. The two shippers, which together control more than 100 very large crude carriers capable of carrying 2 million barrels of oil each, handled about half of China’s crude imports from the Middle East before the Iran war began in late February.
Early Market Call – as of 8:55 AM EDT
WTI – Sep $84.71, down 56 cents
RBOB – Sep $3.2839, down 2.43 cents
HO – Sep $4.4206, down 7.04 cents
