Oil prices were pressured by trade disputes between the U.S. and China

Recap: Oil prices bounced around the unchanged level on Tuesday, with tensions in the Middle East providing early support, while trade disputes between the U.S. and China added pressure. A lack of fresh fundamentals has kept prices contained within a $4.00 trading range for the past 3 weeks, with WTI holding between $60.00 and $64.00 a barrel, and Brent range trading between $73.50 and $69.30 a barrel. July WTI was trading at $63.78, up 57 cents in early morning trading, but by 11:56 EDT, this spot contract fell to a session low of $62.78, down 33 cents on the day. July Brent reached a high of $72.52, for a gain of 55 cents before falling to a low of $71.61, down 36 cents. Prior to the settlement period, these two contracts diverted slightly, with July WTI closing down 11 cents, or .17%, to settle at $62.99 a barrel, while July Brent settled at $72.18 a barrel, up 21 cents, or .29%.  June RBOB added 0.5% to $2.019 a gallon, while June heating oil climbed 0.3% to $2.079 a gallon.

Technical Analysis: WTI continued hold below the downward trend line on the symmetrical triangle, while holding above the 10 and 50-day moving averages, which are $62.54 and $62.52, respectively. As a reminder, as the market trades closer toward the apex of the symmetrical triangle, this formation will lose significance. Our stance on this market has not changed therefore we look for continued sideways trading. Support is set at $62.41 and the aforementioned $61.66, the bottom of the aforementioned triangle. Resistance is set at $63.83 and above that at $65.00.

Fundamental News:  Iraq’s Oil Minister, Thamer Ghadhban, said growing tensions in the Middle East pose a challenge to the stability of global crude oil markets.  He said OPEC’s ministerial monitoring committee must monitor markets to pave the way for a new agreement to be discussed at an upcoming OPEC meeting in Vienna to help stabilize markets and support prices. 

Iranian President, Hassan Rouhani, rejected any talks with the US and called on Tuesday for the government to be given more power to run the economy in an “economic war.”  The US said it aimed to push Iran into new negotiations on a broader arms control deal.  Iran has repeatedly rejected any further negotiations as long as the US remains outside the nuclear pact. 

The French Finance Minister said European powers are facing huge pressure from the US to drop its proposed trade channel with Iran, but it will also not succumb to ultimatums from Iran. He said the European powers are determined to show they can compensate for last year's U.S. withdrawal from the accord but daily threats from Iran to withdraw from the agreement were making its talks on creating the trade channel more difficult.

The Joint Organizations Data Initiative reported that Saudi Arabia’s oil exports in March increased to 7.14 million bpd from 6.977 million bpd in February.  The country’s oil production in March fell by 349,000 bpd on the month to 9.787 million bpd.  Saudi Arabia’s crude stocks in March fell by 3.599 million barrels to 200.968 million barrels.   

Belarusian Prime Minister, Sergei Rumas, said he planned to discuss the contamination of Russian oil via the Druzhba pipeline with Russia’s Prime Minister, Dmitry Medvedev, on Friday.  He said the main task for Belarus now is to pump out contaminated oil so that it can restore the oil flows

Poland’s Prime Minister, Mateusz Morawiecki, said Russian oil suppliers made big mistakes in the wake of the supply of contaminated oil and they will have to respond financially.  Pipeline operator Transneft is set to compensate buyers for any proven losses.       

Shell said Nigeria’s Trans Forcados pipeline remains closed but no force majeure has been declared after a fire broke out on Sunday. 

Early Market Call – as of 8:25 AM EDT

WTI – June $62.25 down 88 cents

RBOB – June $2.0102 down 91 points

HO – June $2.0581 down 2.13 cents

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