Prices were pulled higher by the Syncrude oil sands outage

Recap: Oil prices rose on Thursday, with the August WTI contract trading briefly above $74.00, the highest a spot contract has traded since November 2014. September Brent tipped above $78.00. Prices continue to be pulled higher by the Syncrude oil sands outage, which has led to a draw down in U.S. crude oil stocks located at Cushing, OK and the reissuance of U.S. sanctions against Iran.

After brief downside profit taking early in the session, August WTI broke above unchanged, reaching a high of $74.03 a barrel, but a lack of advancement above the $74.00 level prompted technical selling, taking this spot contract back toward $73.00. It continued to trade sideways for the remainder of the session, holding within the range of $73.18 and $73.70, before settling at $73.45 a barrel, up 69 cents, or 0.95%. August Brent settled at $77.85 a barrel, up 23 cents, or 0.30%. The discount on the Brent/WTI spread continues to narrow, trading at -$3.93, its narrowest discount since April. 

July RBOB finished nearly unchanged at $2.133 a gallon, while July heating oil rose 0.1%, to $2.178 a gallon.

Fundamental News: Genscape reported that crude oil inventories in Cushing, Oklahoma fell by 3.1 million barrels in the week ending June 26th.

US Energy Secretary, Rick Perry, said the US’ relationship with Saudi Arabia is good.  Separately, he stated that he is confident that Saudi Arabia and Russia can increase their crude oil production to stabilize the world oil market and compensate for supply losses caused by renewed US sanctions on Iran. 

The chairman of Libya’s National Oil Corp in Tripoli said he is confident that the US and other world powers would help block authorities in eastern Libya from exporting any crude after militia captured key ports there.  Forces loyal to Khalifa Haftar, have handed over control of ports with a combined export capacity of 800,000 bpd to a rival company in the eastern city of Benghazi. 

A US State Department official said the US is prepared to work with countries on a case by case basis to help them reduce imports of Iranian oil as the US prepares to reimpose sanctions against Iran in November.  Senior Trump officials have visited European countries this week and will head to the Middle East and Asia later to pressure countries to reduce their oil supplies from Iran.  Administration officials said they will urge Saudi Arabia and other Gulf states next week to ensure there are enough global oil supplies once sanctions are reimposed on Iran. 

Iran criticized Saudi Arabia’s plan to raise oil production and pressure from the US on Riyadh to do so, saying this was a breach of OPEC’s decision last week.  Iran’s OPEC Governor, Hossein Kazempour Ardebili, was reacting to reports that Saudi Arabia would increase its output in July to 10.8 million bpd and 11 million bpd, up from its OPEC target of 10.058 million bpd.  Iran’s OPEC Governor said the OPEC agreement does not allow above-quota oil output and added that any breach of the accord means the US State Department is running OPEC.

India’s Oil Ministry has asked refiners to prepare for a drastic reduction or zero imports of Iranian crude starting in November.  India has said it does not recognize unilateral restrictions imposed by the US and instead follows UN sanctions.  However, industry sources said India, the largest buyer of Iranian oil after China, will be forced to take action to protect its exposure to the US financial system.  India’s Oil Ministry held a meeting with refiners on Thursday, urging them to scout for alternatives to Iranian oil. 

Early Market Call – as of 8:45 AM EDT

WTI – Aug $73.45, unchanged

RBOB – July $2.1488, up 1.59 cents

HO – July $2.1921, up 1.39 cents

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