Oil prices rose for the third straight week

Recap: Oil prices rose for the third straight week with WTI settling above $42 a barrel for the first time since the beginning of September, and Brent barely missing the $45 mark. WTI and Brent recovered from early weakness, as  traders finished the week with a sense of optimism over the successful vaccine trials, while  renewed lockdowns kept a lid on prices. December WTI settled at $42.15, up 41 cents, or 0.98, while the January 21 contract added 52 cents, or 1.2%, to settle at $42.42 a barrel. January 21 Brent added 76 cents, or 1.72%, to settle at $44.96 a barrel. Both WTI and Brent were up 5% on the week. December RBOB tacked on 1.27 cents, to close at $1.1752 a gallon, while December heating oil settled at $1.2863 a gallon, up 1.56 cents.

Technical AnalysisOil prices remained positive, as excitement over the announcement of several successful vaccine trials overshadowed concern over the spike in the number of COVID-19 cases across the globe. WTI will need several bullish inventory reports or another dose of vaccine positive news to settle above the $43 level and have a realistic chance to move above August’s high of $43.75. At this point, we still believe that the oil market will remain range bound until it receives a boost from some type of catalyst. A settlement above $43 opens up for a run at $45. To the downside, support is seen at $41.29 and $40.45.

Fundamental News: U.S. energy firms cut the number of oil and natural gas rigs operating for the first time in 10 weeks even as producers return to the wellpad.  According to Baker Hughes, the U.S. oil and gas rig count fell by two to 310 in the week ending November 20th.  The total rig count fell to a record low of 244 in the week ending August 14th, while oil rigs alone fell to a 15-year low of 172 in the same week.  U.S. oil rigs fell five to 231 this week, after rising last week to their highest since May, while gas rigs gained three to 76, their highest since July.

IIR Energy reported that U.S. oil refiners are expected to shut in 3.9 million bpd of capacity in the week ending November 20th, increasing available refining capacity by about 117,000 bpd from the previous week.  Offline capacity is expected to decline to 3.7 million bpd in the week ending November 27th and fall by a further 1.1 million bpd to 2.6 million bpd in the subsequent week.

Euroilstock reported that European refinery crude processing in October fell by 3.1% on the month and by 15.4% on the year to 8.447 million bpd.  It reported that Europe’s refinery output fell by 2.9% on the month and by 13.7% on the year to 8.965 million bpd.  European gasoline output in October increased by 1.2% on the month but fell by 6.7% on the year to 2.229 million bpd, while middle distillates output fell by 5.2% on the month and by 16.5% on the year to 4.5 million bpd and fuel oil output fell by 4.1% on the month and by 32.4% on the year to 696,000 bpd.

G20 nations vowed to continue doing everything possible to contain the COVID-19 pandemic, warning in excerpts of a draft communique that the global economic recovery remains "uneven, highly uncertain, and subject to elevated downside risks."  In the draft, the leaders noted that the coronavirus crisis had hit the most vulnerable in society the hardest, and said some countries may need debt relief beyond a temporary freeze in official debt payments that ends in June 2021.

Kansas City Federal Reserve Bank President, Esther George, said the U.S. recovery from the coronavirus crisis could face some headwinds from the energy sector, as massive cuts in U.S. oil production this year reverberate through the economy.

Early Market Call – as of 8:40 AM EDT

WTI – Dec $42.89 Up .47 cents

RBOB – Dec $1.1930 Up 1.76 cents

HO – Dec $1.3046 Up 1.81 cents

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