Oil futures finished slightly lower on Monday

Recap: Oil futures finished slightly lower on Monday, as U.S. government officials failed to reach a stimulus agreement, while concern over surging COVID-19 cases continued to keep prices under pressure. A committee meeting between OPEC+ members also failed to supply support for prices. November WTI fell 5 cents, or 0.1%, to settle at $40.83 a barrel, while the soon to be spot month December, lost 6 cents, or 0.2%. December Brent fell 31 cents, or 0.7%, to settle at $42.62 a barrel. November RBOB slipped 0.6%, to $1.1623 a gallon, while November heating oil lost 1.8%, to $1.1581 a gallon.

Technical AnalysisOil prices remain contained by the number of globally rising coronavirus cases, as renewed lockdowns can significantly damage demand. However, traders have managed to provide enough support to keep WTI near $40. OPEC+ producers, concerned about demand, are working to keep prices from collapsing. As a result, they may be willing to keep production low in an effort to avoid the appearance of having lost control of this market. Traders are also focused on U.S. oil production, as the recent Baker Hughes Rig Count report indicated that the number of active rigs increased by 12 to 205. Traders are contending with a number of issues, which include further lockdowns in an oversupplied market, the lack of economic stimulus and the inability of OPEC+ to prop up prices.  December WTI sits just above its 20 and 50-day moving averages, with the 10-day average above the 50-day moving average, indicating higher prices. Looming just above is $42.10, the 200-day moving average. This market should continue to struggle for direction, with the $40 level maintaining its gravitational pull. Above the 200-day moving average, additional resistance is set at $43.50. To the downside support rests at $40.65 and below that at $37.50.

Fundamental News: Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said no-one should doubt OPEC’s commitment to support the oil markets.  On Monday, an OPEC+ ministerial monitoring committee held talks to discuss compliance with their oil output cuts.  The JMCC found underperformance with oil cuts in September at 199,000 bpd and pledged action to support the oil market.  It said full or partial lockdowns this winter could put oil demand at further risk.  The Joint Ministerial Monitoring Committee made no recommendation on Monday to change previously approved policy for 2021.  The next full OPEC meeting is scheduled for November 30th to December 1st. 

The Kremlin said Russia and Saudi Arabia are in talks on how to support volatile oil markets, as rising coronavirus infections worldwide cut fuel demand.  Russia’s President, Vladimir Putin, and Saudi Arabia's Crown Prince Mohammed bin Salman held two phone calls last week to discuss oil markets.  Separately, Russia’s Energy Minister, Alexander Novak, said that the second wave of the COVID-19 pandemic has slowed down the recovery of the oil market.  He said the monitoring committee recommended to comply in full to the global deal to reduce oil production.  He said we will see more uncertainty in the oil market in the winter.  He also stated that current oil prices are in line with the current situation.   

According to the Joint Organizations Data Initiative, Saudi Arabia's crude oil exports increased to 5.97 million bpd in August from 5.73 million bpd in July.  The country's crude output increased by 500,000 bpd to 8.98 million bpd in August. 

Production at Libya’s Sharara oilfield has increased to about 150,000 bpd, around half of its capacity.  Libya’s National Oil Corp lifted a force majeure on the field on October 11th.  The field started operations at a rate of about 40,000 bpd, which gradually increased to around 100,000 bpd at the end of last week. 

Libya's 70,000 bpd Abu Attifel oilfield is expected to begin its restart on October 24th after being shut down for months. 

Early Market Call – as of 8:25 AM EDT

WTI – Nov $40.68, down 15 cents

RBOB – Nov $1.1649, up 26 points

HO – Nov $1.1547, down 34 points

View the Sprague Refined Products Market Watch Report in a downloadable pdf format by clicking below.

Click to view more online:
Heating Oil Supplier

Diesel Supplier
View market updates
View our refined products glossary
Go to SpraguePORT online

This market update is provided for information purposes only and is not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes no representations or warranties with respect to the contents of such news, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible for the consequence of reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact. The views expressed in this material are through the period as of the date of this report and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance or results and actual results or developments may differ materially from those projected. The whole or any part of this work may not be reproduced, copied, or transmitted or any of its contents disclosed to third parties without Sprague’s express written consent.