Oil Market Continued to Trade Higher on Thursday in Follow Through Strength Seen on Wednesday in Light of the Unexpected Draw in Crude Stocks

Market Insights
Heating Oil
May 10, 2024
Recap: The oil market continued to trade higher on Thursday in follow through strength seen
on Wednesday in light of the unexpected draw in crude stocks of over 1.3 million barrels
reported by the EIA. The market was also supported by the news that China’s crude oil imports
increased on the previous year in April and exports and imports returned to growth in April,
signaling an improvement in demand. The crude market continued its upward trend in
overnight trading and rallied to a high of $79.80 early in the morning. The market later erased
some of its gains, posting a low of $78.91 by mid-day and settled in a sideways trading range
during the remainder of the session. The June WTI contract settled up 27 cents at $79.26 and
the July Brent contract settled up 30 cents at $83.88. The product markets also ended higher,
with the heating oil market settling up 15 points at $2.4776 and the RB market settling up 1
cent at $2.5418.

Technical Analysis: The crude market on Friday is seen remaining supported ahead of the
weekend in light of some supportive fundamentals and as stochastics have crossed back to the
upside. The market will also continue to seek further updates regarding the continuing tension
in the Middle East after Israel’s negotiators left talks in Egypt without signing a ceasefire
agreement with Hamas. The market is seen finding resistance at its high of $79.80, $79.90,
$80.74, $81.57, $81.95, $82.39, $82.95 and $83.12. Meanwhile, support is seen at its low of
$78.91, $76.89, $76.67, $76.07 and $75.10.

Fundamental News: U.S. President Joe Biden vowed publicly for the first time to withhold
weapons from Israel if its forces make a major invasion of Rafah in southern Gaza. President
Biden’s comments increase the pressure on Israel to refrain from a full -scale assault on Rafah,
where hundreds of thousands of Palestinians have sought refuge after fleeing combat farther
north in Gaza. There was no immediate comment from Israel on Biden's remarks, but Israeli
Prime Minister Benjamin Netanyahu has said the Rafah operation would proceed. Separately,
Israel's former head of defense production and procurement rejected the claim the country
could manage without American arms, saying Israel would be forced to source arms
elsewhere. Later, White House national security spokesman, John Kirby, said Israel
undertaking a major Rafah operation will not advance the objective of both Washington and
Tel Aviv of defeating the Hamas Palestinian militant group in Gaza.

A senior Israeli official said Israel told Gaza truce mediators its reservations of a Hamas
proposal for a hostage-release deal, and deemed this round of negotiations in Cairo to have
ended. The official said the Israeli delegation is returning from the Egyptian capital and Israel
will proceed with its operations in Rafah and other parts of the Gaza Strip as planned.

Late Wednesday, Palestinian militant group Hamas said it would not make more concessions
to Israel in the truce talks. In Cairo, delegations from Hamas, Israel, the U.S., Egypt and Qatar
have been meeting since Tuesday. Egypt's state-affiliated Al Qahera TV said early on Thursday
that areas of disagreement were being resolved and there were signs an agreement will be
reached, without giving details.

The EIA reported that U.S. crude oil imports from Mexico last week rose for the thirds week in
a row and reached a new high for 2024 at 805,000 b/d. This was a 75% increase over the prior
week’s imports.

Early Market Call - as of 8:20 AM EDT
WTI - June $79.68, up 42 cents
RBOB - June $2.5570, up 1.52 cents
HO - June $2.4793, up 17 points

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