Oil prices rose as cuts in Venezuela and Iran tighten supply

Recap:  Oil prices rose on Friday as concerns over tightening supplies increased due to supply cuts from Venezuela and Iran and conflicts in Libya. Adding to the up move was supportive trade data out of China, which reported larger than expected surplus as exports surged. The oil market also followed a higher global stock market. May WTI was trading at $64.65 a barrel by 8:15 EST, up $1.07 from Thursday’s close. June Brent added $1.04 to trade at $71.87 a barrel.  May WTI rose 31 cents, or 0.5%, to settle at $63.89 a barrel, for a gain of 1.3% on the week. June Brent added 72 cents, or 1%, to $71.55 a barrel, for a weekly advance of 1.7%. May RBOB added 0.3% to $2.037 a gallon, with prices up 3.5% for the week, while May heating rose 0.2% to $2.071 a gallon, ending the session up 1.4% from a week ago.

Technical Analysis:  Friday’s market activity indicated a lack of certainty to the upside for oil prices, as WTI failed to settle above $64.00. Bulls were looking for a settlement above this level as a vote of confidence. At the onset of next week, we would look for advancements back above $64.00, with settlements above this level allowing for a run at $65.00. Additional resistance is set at $65.75, with support set at $63.22 and below that at $62.00. 

Fundamental News:  Baker Hughes reported that the number of rigs drilling for oil in the US increased by 2 to 833 in the week ending April 12th. 

The US approved nearly 40% more oil and gas drilling permits on public lands in 2018 than it did the previous year due to an automated online system introduced in the last days of the Obama administration, helping reduce a backlog of applications.  The Department of Interior’s Bureau of Land Management approved 3,991 drilling permits in fiscal 2018, up from 2877 in 2017.  The average time to process an application to drill was cut nearly in half to 63 days from 120 days in 2017.

The head of Libya’s National Oil Corp, Mustafa Sanalla, warned that the renewed fighting in the country “could wipe out” the country’s crude production. 

Norway’s Petroleum Directorate said the country’s oil production in March fell by 8.2% on the year to 1.396 million bpd, lagging the official forecast for the month by 1.5%.  Natural gas output in March increased by 3.3% in the same period to 359.1 million cubic meters/day, exceeding NPD’s forecasts by 2.4%. 

IIR Energy reported that US oil refiners are expected to shut in about 1.3 million bpd of capacity in the week ending April 12th, increasing available refining capacity by 49,000 bpd from the previous week.  The offline capacity is expected to fall to 1 million bpd in the week ending April 19th. 

Thousands of Iranians marched on Friday to protest against the US designation of the Revolutionary Guards as a foreign terrorist organization.  Iranian officials have condemned US President Donald Trump’s decision to blacklist the Islamic Revolutionary Guards Corps.  Iran retaliated by naming the regional United States Central Command as a terrorist organization. 

Gunfire and blasts echoed through Libya’s capital on Friday as eastern forces fought troops of the international recognized government in southern Tripoli suburbs, forcing thousands of civilians to flee their homes.  The UN, which had hoped to organize a national conference this month bringing the rival eastern and western administrations together to organize an election, has called for a ceasefire.  The US, G7 bloc and European Union have also urged the LNA to halt its offensive. 


Early Market Call – as of 8:15 AM EDT

WTI – May $63.19, down 70 cents

RBOB – May $2.0067, down 3.11 cents

HO – May $2.0504, down 2.10 cents

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