Recap: The crude market on Wednesday continued on its upward trend amid the absence of moves to resolve the U.S.-Iran standoff over the Strait of Hormuz. Confidence in safe passage through the Strait of Hormuz remains low, with shipping volumes remaining well below normal levels seen before the Iran war began. On Tuesday, U.S. President Donald Trump said that no talks were taking place with Iran or scheduled after the temporary ceasefire agreement expired on Monday and insisted that the Strait of Hormuz was open, contradicting Iran, which said the waterway remained shut. The oil market retraced more than 62% of its move from a high of $93.50 to a low of $74.24 as it traded $86.31 in overnight trading. However, the market erased some of its gains and posted a low of $84.32 and settled in a sideways trading range ahead of the release of the EIA’s weekly petroleum stocks report. The market later continued to trend higher, posting a high of $87.19 in afternoon trading. The September WTI contract settled up 89 cents at $85.83 and the October Brent contract settled up 60 cents at $91.62. Meanwhile, the product markets ended the session in mixed territory, with the heating oil market settling up 22 points at $4.4523 and the RB market settling down 4.66 cents at $3.2551.
Technical Analysis: The oil market is seen continuing on its upward trend as traders remain concerned about the stalled peace talks and the escalating tensions in the Middle East after the UAE decided to suspend all financial and economic transactions with Iran. The crude market is seen finding resistance at $87.19 to $87.68 followed by $92.83 and $93.50. Meanwhile, support is seen at $84.32, $81.50, $80.71, $80.09, $77.79, $76.53, $74.57 and $74.24.
Fundamental News: Shipping through the Strait of Hormuz slowed as most ship owners avoided the waterway because of a lack of clear signaling on its reopening from a blockade. Kpler data showed that six commodity vessels crossed the strait on Tuesday, down from nine a day earlier and below the 10-day daily average of 11. Inbound traffic included an empty very large crude carrier that followed the Omani side of the strait, as well as two tankers, one of medium-range and the other intermediate. Two medium-range fuel tankers and a post-Panamax vessel exited the strait. Kpler data showed that at the Bab el-Mandeb Strait on the Red Sea, there were 30 weekend transits by commodity vessels, up from 19 in the prior week. There were no tracked Saudi oil shipments.
The United Arab Emirates’ Defense Ministry said that it had detected two ballistic missiles launched from Iran, the first such incident reported since a May 4th strike on the Fujairah port. In a statement issued after the missile threat, the UAE said it had suspended all trade activities, commercial exchanges and financial transactions with Iran until further notice, citing an escalation that it said undermined regional and international peace and security. Iran’s foreign ministry spokesperson Esmaeil Baghaei rejected early on Wednesday the statement by the UAE, describing it as “baseless.”
IIR Energy said U.S. oil refiners are expected to shut in about 75,000 bpd of capacity in the week ending August 21st, increasing available refining capacity by 88,000 bpd. Offline capacity is expected to fall to 8,000 bpd in the week ending August 28th.
Marathon Petroleum reported a unit upset resulting in sulfur dioxide emissions at its 631,000 bpd Galveston Bay, Texas refinery.
PBF Energy reported a planned flaring event from August 19th-21st at its 160,000 bpd Torrance, California refinery.
Flint Hills Resources reported emissions at its 290,000 bpd Corpus Christi, Texas West refinery.
Early Market Call – as of 8:30 AM EDT
WTI – Sep $89.00, up $3.00
RBOB – Sep $3.2559, up 4.25 cents
HO – Sep $4.5047, up 6.1 cents
