Recap: The oil market ended the session higher on Thursday following four consecutive sessions of losses as expectations of a diplomatic breakthrough faded. The market was pressured after the Wall Street Journal said the Trump administration has repeatedly told mediators that it has no interest in reviving the memorandum of understanding signed in June, complicating the diplomatic efforts to restart talks between the U.S. and Iran. Also, earlier on Thursday, Washington confirmed it was not in talks with Iran despite the efforts by other countries to re-engage the two sides. The oil market traded lower in overnight trading to a low of $80.65. However, the market bounced off that level and never looked back. It retraced more than 50% of its move from a high of $87.69 to a low of $79.62 as it rallied to a high of $84.27 ahead of the close. The October WTI contract settled up $1.30 at $83.53 and the October Brent contract settled up $1.86 at $89.70. The product markets also ended the session higher, with the heating oil market settling up 1.87 cents at $4.2787 and the RB market settling up 6.41 cents at $3.3842.
Technical Analysis: The crude market on Friday will remain well supported by fading expectations that the U.S. and Iran will engage in talks to end the war, with U.S. President Donald Trump stating that the U.S. was focused on punishing Iran economically and would penalize countries that conduct business with Iran. There is no quick resolution as Iran continues to use the Strait of Hormuz as leverage, with Iran stating that it will not reopen the waterway unless the U.S. complies with the conditions set under the memorandum of understanding. The oil market is seen finding resistance at $84.27, $84.61, $85.84, $86.57, $87.51, $87.69 and $88.07. Meanwhile, support is seen at $80.65, $79.62, $78.67, $76.80, $75.35, $73.47 and $73.10.
Fundamental News: Iran’s Oil Minister, Mohsen Paknejad, said Iran’s oil sales and deliveries in “distant waters” continue despite reduction.
Shipping traffic at the Strait of Hormuz increased slightly even as a standoff persisted between the United States and Iran. Kpler data showed that visible commodity vessel transits at Hormuz totaled 10 on Wednesday, up slightly from eight on Tuesday. This was below a 10-day moving average of about 15 vessels. Two medium-range fuel tankers, a liquefied petroleum gas carrier, a Panamax-sized tanker, and three handymax-sized tankers entered the strait from the Gulf of Oman. A medium-range fuel tanker, a bitumen tanker and a bulk carrier exited the waterway from the Gulf. Meanwhile, traffic slowed for a second day at the other key waterway of the Bab el-Mandeb strait. According to Kpler data, a total of 19 commodity vessels passed through Bab el-Mandeb on Wednesday, with six tankers that exited, including a very large crude carrier, down from 24 on the previous day.
Sources said President Donald Trump is expected to convene U.S. refiners and fuel retailers next week to highlight efforts to lower gasoline prices.
BP has urged leaders of United Steelworkers Local 7-1 to agree to federal mediation and resume contract negotiations at its Whiting, Indiana, refinery, saying the union has yet to respond to a proposal to use mediation services to help resolve a labor dispute. More than 800 unionized workers at BP’s 440,000 bpd Whiting refinery have been locked out since March after contract negotiations broke down over issues including jobs, pay, benefits and bargaining rights, with the two sides still without a new labor agreement.
Early Market Call – as of 8:25 AM EDT
WTI – Oct $82.83, down 71 cents
RBOB – Sep $3.42, up 4.2 cents
HO – Sep $4.3045, up 3.25 cents
