Oil prices edged higher on Tuesday

Recap: Oil prices edged higher Tuesday amid hopes that trade talks between China and the U.S. will ultimately result in a deal that sustains global economic growth and energy demand while OPEC restrains production. Oil markets received an extra boost after Russian news agency TASS said that OPEC and other major producers are considering extending the agreed upon output cuts for additional 3 to 6 months after the expiration date of March 2020. January WTI rose 55 cents, or 0.9% to a session high of $58.56 a barrel before paring gains for a settlement of $58.41 a barrel, up 40 cents, or 0.6%. January Brent added 62 cents, or 0.9%, to settle at $64.27 a barrel. December RBOB closed up 1.7% at $1.7047 a gallon, while December heating oil rose 0.8% to $1.9606 a gallon.

Technical Analysis: Oil prices remain in an uptrend, with a break above $58.74 helping to accelerate a move toward the $60.00 area. Above this level, additional resistance is set at $60.00 and above that at $61.15. Support is seen at $57.57 and below that at $56.60.

Fundamental News:  The head of the International Energy Agency, Fatih Birol, said OPEC countries, which are meeting next week to discuss their level of oil output, should make the right decision for the global economy, which remains “very fragile.”  Overall, he expected oil supply to be plentiful, the result of demand slowing due to weaker economic growth, especially in China.  In regards to the US, he said he expected production growth in the shale oil sector to slow from previous “explosive” levels due to the financial difficulties of some US shale producers, not because shale resources were depleting.   

An OPEC source said the OPEC’s Joint Technical Committee that reviews the state of the oil market has scheduled a meeting for December 3rd in Vienna.  OPEC is scheduled to meet on December 5th followed by talks with other producers, including Russia, that have agreed to reduce output to support prices. 

Brazilian oil workers represented by the Federation of Oil Workers, or FUP, walked off the job on Monday morning, defying a labor court judge’s order that called the walkout illegal.  The strike is expected to last until Friday and will not affect essential needs of the population. 

Energy Aspects reported that oil refineries are likely cutting runs at around 300,000 bpd due to weak profit margins.  It stated that there has been some trimming of runs in Singapore, Korea, Italy, Rotterdam and parts of Latin America and with new refining capacity ramping up in Asia, this volume of run cuts will be easily offset. 

US President, Donald Trump, said the US was in the “final throes” in its attempt to reach a trade deal with China, but at the same time the US stands with protesters in Hong Kong, where it wants to see democracy. 

The European Union said officials from China, Russia, France, Germany and Britain will meet with Iran in Vienna on December 6th to discuss how to uphold the 2015 nuclear deal with Iran. 

Early Market Call – as of 8:30 AM EDT

WTI – Jan $58.51, up 10 cents 

RBOB – Dec $1.6871, down 76 points

HO – Dec $1.9684, up 78 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.