Oil futures fell for a fifth session in a row on Monday

Recap: Oil futures fell for a fifth session in a row on Monday, with the U.S. benchmark logging its lowest finish in almost six weeks as the immediate risk of a bigger U.S.-Iran conflict continued to fade, easing worries about potential global supply disruptions. Traders turned their focus on low seasonal demand, following last week’s bearish U.S. inventory report. February WTI fell by 96 cents, or 1.6%, to settle at $58.08 a barrel, the lowest finish for a front-month contract since Dec. 3. Prices also tallied a fifth straight session decline. March Brent lost 78 cents, or 1.2%, to $64.20 a barrel, the lowest settlement since Dec. 12. February RBOB fell 0.1% to $1.6573 a gallon, while February heating oil declined by 1.6% to $1.898 a gallon.

Technical Analysis: After dipping below $58.80, WTI picked up momentum to the downside. Although moving oscillators are set in over sold territory, they are indicating that this market has more room to the downside. That being said, we would look for a run at the $57.50 area. Below this level, additional support is set at $56.00. To the upside, resistance is set at $59.37 and above that at $60.27, the 50 and 10-day moving averages, respectively.   

Fundamental News: Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman Al-Saud, said the country has taken all precautions to ensure the safety of oil facilities after recent strikes in Iraq.  He said Saudi Arabia’s oil production is at 9.744 million bpd in January and February.  He said Saudi Arabia will work for oil market stability at a time of heightened US-Iranian tension and wants to see sustainable prices and demand growth.  He said it was too early to talk about whether OPEC and its allies would continue with production cuts agreed under a deal that expires in March.  He also stated that Iraq’s compliance with OPEC cuts improved in December and is looking for full compliance in January. 

Baker Hughes reported that energy firms in Canada increased the number of rigs drilling for oil and natural gas last week by the most since January 2015.  Drillers added 118 rigs during the week ending January 10th, bringing the total count up to 203, the highest since March 2019.   

Azerbaijan’s Energy Ministry reported that the country’s crude oil production stood at 764,000 bpd in 2019. 

China’s CNPC reported that the country’s apparent crude oil demand increased by 3.6% on the year to 719 million tons in 2020.  China’s crude oil imports is forecast to increase by 1.57% on the year to 194 million tons in 2020.  Its crude oil imports are expected to increase by 4.4% on the year to 525 million tons in 2020.  It is forecast to add 27 million tons of new crude refining capacity in 2020. 

IIR Energy reported that US oil refiners are expected to shut in 628,000 bpd of capacity in the week ending January 17th, cutting available refining capacity by 341,000 bpd from the previous week.  Offline capacity is expected to increase to 770,000 bpd in the week ending January 24th. 

A senior US Chamber of Commerce official said the Phase 1 trade deal expected to be signed this week by China and the US “stops to bleeding” but does not end the trade war, warning that significant challenges remain.  

Early Market Call – as of 9:10 AM EDT

WTI – Feb $58.53, up 45 cents

RBOB – Feb $1.6841, up 2.67 cents

HO – Feb $1.9107, up 1.27 cents

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