Oil prices gradually moved higher in overnight trading

Recap: Oil prices began the session trading slightly above unchanged, gradually moving higher in overnight trading. Across the board declines in U.S. petroleum stocks halted an early morning retreat, propelling oil prices to their highest level since December of 2014. May WTI jumped to a high of $68.45 immediately after the release of the report, but by mid-day slipped to just above $67.50. Geopolitical tensions, combined with Saudi efforts to push prices to $80 per barrel propped up prices once again, with May WTI topping the session at $68.72, which was achieved after the market had settled for the day. May WTI settled at $68.47 a barrel, up $1.95, or 2.93%. May RBOB rose 1.3% to $2.068 a gallon, while May heating oil gained 1.7% to $2.091 a gallon.

Fundamental News: Three industry sources said that Saudi Arabia would be happy to see crude prices rise to $80/barrel or even $100/barrel, a sign that the country will seek no changes to an OPEC supply cut agreement even though the agreement’s original target is within sight.  Over the past year, Saudi Arabia has emerged as OPEC’s leading supporter of measures to increase prices, a change from its more moderate stance in earlier years.  Industry sources have linked this shift in Saudi Arabia’s stance to its desire to support the valuation of Saudi Aramco ahead of its planned sale of a minority stake in an initial public offering.   

RIA news agency reported that Russian Energy Minister, Alexander Novak, said he would meet his Saudi Arabian counterpart, Khalid al-Falih, on April 20th.  The Joint OPEC-Non-OPEC Ministerial Monitoring Committee will hold talks later this week in Saudi Arabia.  Russia’s Energy Minister is due to take part in the meeting. 

The Joint Organizations Data Initiative reported that Saudi Arabia’s crude output in February fell by 48,000 bpd on the month to 9.935 million bpd.  Saudi Arabia’s crude oil exports in February increased to 7.251 million bpd from 7.17 million bpd in January, while its oil product exports increased by 88,000 bpd to 2 million bpd.  It also reported that Saudi Arabia’s crude stocks fell by 3.88 million barrels to 236.928 million barrels in February.  Its domestic refinery crude throughput fell by 142,000 bpd to 2.48 million bpd in February.  

According to the head of the IEA’s oil industry and market division, Neil Atkinson, the shipping industry and oil refineries are not doing enough to prepare for new rules cutting the amount of sulfur that vessels can emit from 2020.  The new rules cut the amount of Sulphur that the world’s ships can emit, from 3.5% currently to just 0.5%.  Analysts expect fuel oil demand to fall by 2-3.5 million bpd as a result. 

IIR reported that US oil refiners are expected to shut in 1.157 million bpd of capacity in the week ending April 20th, cutting available refining capacity by 53,000 bpd from the previous week.  IIR expects offline capacity to increase to 1.237 million bpd in the week ending April 27th. 

Enbridge reported that line 4/67 nominations are at 43% apportionment for May while line 2/3 nominations are at 31% apportionment for May. 

Two 60,000 ton tankers were storing gasoline off the coast of northwest Europe, down from as much as 400,000 tons of floating storage earlier this month.  Exports from Europe to the US East Coast remained relatively low due to weak arbitrage economics but activity was expected to increase ahead of the summer and as US inventories decline. 

Early Market Call – as of 8:30 AM EDT

WTI – May $69.34, up 87 cents

RBOB – May $2.0835, up 1.53 cents

HO – May $2.1176, up 2.61 cents

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