The oil market erased some of Friday’s gains but held its support level amid the supply concerns

Recap: The oil market on Monday posted an inside trading day as it erased some of Friday’s gains but held its support level amid the supply concerns.  The market opened slightly lower and traded sideways in overnight trading before the market attempted to test its previous high early in the session.  The market was supported amid reports that the Trump administration could unveil further tariffs on Chinese imports.  However, the market, which failed to trade higher as it posted a high of $69.72, erased any of its gains and sold off to a low of $68.53 by mid-day.  The market later settled in 50 cent trading range ahead of the close.  The October WTI contract settled down 8 cents at $68.91.  The November Brent contract settled down 4 cents at $78.05.  The product markets were mixed, with the heating oil market settling down 28 points at $2.2064 and the RBOB contract settling up 66 points at $1.9768. 

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, September 14th fell by 2,228,640 barrels on the week and by 615,787 barrels from Tuesday, September 11th to 25,207,102 barrels.  

According to a PDVSA technical report, Venezuelan crude exports will continue to decline in October despite recent measures taken by the government to increase shipments.  Commitments in effect for October are for shipments totaling 1.854 million bpd.  However, there is a gap of 871,000 bpd between the volumes promised and the real export capacity of 983,000 bpd. 

The head of the Atomic Energy Organization of Iran, Ali Akbar Salehi, said the US withdrawal from the nuclear agreement struck between Iran and major powers is doomed to seriously affect peace and security in the Middle East.

OPEC’s Secretary General, Mohammad Barkindo, said that OPEC needs to keep working with other oil producers to manage global supplies as demand for crude faces headwinds.  He said oil demand is “robust” though crude use is “beginning to face some headwinds” without elaborating. 

Russia’s Energy Minister, Alexander Novak, and his Saudi Arabian counterpart, Khalid Al-Falih, confirmed a commitment to stability in the market and readiness to react quickly to changes following a meeting in Russia on Saturday.  They confirmed a plan to set a long-term format for further cooperation between OPEC and its allies.  He said all possible scenarios for oil output could be discussed at a meeting of OPEC and non-OPEC states in Algeria this month.  Russia’s Energy Minister also stated that Russia is ready to discuss cooperation with the US to balance the oil market but added that it is not holding any such discussions at the moment. 

The EIA reported that output from seven major shale formations in the US is expected to increase by 79,000 bpd to 7.594 million bpd in October.  Production is expected to increase 31,000 bpd in the Permian formation of Texas and New Mexico.  The EIA forecast new well oil production per rig at 1,501 bpd for Bakken compared with a previous forecast of 1,491 bpd a month ago, 546 bpd for Permian compared with a previous forecast of 555 bpd and 1,448 bpd for Eagle Ford compared with a previous estimate of 1,446 bpd. 

Early Market Call – as of 7:40 AM EDT

WTI – Oct $69.74, up 83 cents

RBOB – Oct $2.0004, up 2.3 cents

HO – Oct $2.2360, up 2.96 cents

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