Oil prices fell on Thursday, ending three straight sessions of gains

Recap: Oil futures were unable to sustain late morning gains, as attention once again turned to the global increase in the number of coronavirus cases and its impact on demand and economic growth, while traders await the results of the U.S. presidential election. December WTI slipped back below $3, to a session low of $38.27 before paring losses for a settlement at $38.79 a barrel, down 36 cents, or 0.92%. Based on the most active contract, WTI is up more than 8% week to date. January Brent shed 30 cents, or 0.7%, to settle at $40.93 a barrel. Today’s lower move ended three straight sessions of gains. December RBOB added 0.7%, to $1.1159 a gallon, while December heating oil lost 0.3% to $1.1696 a gallon.

Technical Analysis:  December WTI bounced off of $38.28, the current 10-day moving average, as it struggles to regain traction above the 50-day moving average. Despite inching lower on Thursday, WTI remains near a two week high. In the short term, we expect oil to trade in a range of $35 to $42. A break above $42 allows for a push toward $44, with breaks below $35 opening for a run at $33.64. As there is currently no concrete demand for oil and a lack of economic stimulus, crude oil will continue to struggle to the upside and therefore, selling on signs of weakness remains our mantra.

Fundamental News:  Official SOMO data showed that Iraq’s oil production in October, including flows from the semi-autonomous Kurdish region, increased 6.7% on the month to 3.842 million bpd from 3.6 million bpd in September its quota of 3.804 million bpd. Production from the federal government’s fields reached 3.396 million bpd in October, while output from the Kurdish region averaged 446,000 bpd.  Total exports in October increased by 8% to 3.292 million bpd, up from 3.05 million bpd in September, while the Kurdish region exported 416,000 bpd in October, down 4.8% from 437,000 bpd in September. An attack on the Kurdish region’s export pipeline to Turkey’s port of Ceyhan halted exports on October 28th and exports have yet to resume.

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp storage terminal in the week ending November 5th fell by 7.63% on the week but increased by 33.46% on the year to 1.077 million tons, while gasoil stocks increased by 4.38% on the week and by 4.62% on the year to 2.672 million tons and fuel oil stocks fell by 1.53% on the week but increased by 21.93% on the year to 1.351 million tons.  Naphtha stocks increased by 3.19% on the week and by 44.24% on the year to 388,000 tons while jet fuel stocks increased by 3.68% on the week and by 62.9% on the year to 1.212 million tons.

Energy Transfer said it plans to complete work on its Mariner East 2X natural gas liquids pipeline in Pennsylvania by the end of the year and the final phase of the Mariner East projects in the second quarter of 2021. It said it will use part of the eight-inch Mariner East 1 pipe for its new Pennsylvania Access project to bring refined products from the Midwest into Pennsylvania. Mariner East 2 increased total capacity of the system from 70,000 bpd to 345,000 bpd. The Mariner East 2X will add another 250,000 bpd to the system.

The U.S. Labor Department reported that the number of initial unemployment benefit claims fell slightly to a seasonally adjusted 751,000 in the week ending October 31st, compared with 758,000 in the previous week.  The four week moving average of claims fell to 787,000 from 791,000 in the previous week.  The Labor Department also reported that the number of continuing unemployment benefit claims fell to 7.285 million in the week ending October 24th from 7.823 million in the previous week.

Early Market Call – as of 8:25 AM EDT
WTI – Dec $37.64, down $1.15
RBOB – Dec $1.0901, down 2.58 cents
HO – Dec $1.1440, down 2.56 cents
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