OPEC and non-OPEC members are struggling to maintain a balance between supply and demand

Recap: U.S. sanctions against Iran and Venezuela, combined with OPEC led supply cuts, pushed prices to fresh highs for the year. By 07:09 EST, April WTI reached a session high of $59.57 a barrel, surpassing the unchanged mark by 48 cents, while May Brent tacked on 68 cents, to post a session high of $68.20 a barrel. However, prices were unable to sustain strength, as it became apparent that OPEC and non-OPEC members are struggling to maintain a balance between supply and demand amidst rising U.S. shale production. By mid-afternoon, both WTI and Brent slipped below unchanged, with April WTI falling as much as 0.8 percent to a low of $58.62 a barrel and May Brent hitting $67.13 a barrel, down 0.6 percent. However, slightly, Brent was able to work its way back above unchanged to settle at $67.61 a barrel, up 7 cents, or 0.10 percent. WTI for April delivery fell 6 cents, or 0.10 percent, to settle at $59.03 a barrel.  April RBOB rose 0.6% to $1.893 a gallon, while April heating oil rose 1.1% to $1.990 a gallon.

Technical Analysis: WTI continues to work its way toward the $60.00 level, while trending within the upward channel as seen on a daily spot continuation chart. We would look for continued attempts to trade above the $60.00 level. If WTI can break above this level, volume should pick up, and as a result we could see a run up to $65.00. Support is set at $58.75 and $58.30.

Fundamental News: US Special Representative, Elliot Abrams, said talks on Tuesday between the US and Russia on Venezuela were positive and substantive but the two sides were still divided over the legitimacy of President Nicolas Maduro.  The US and many other Western countries support Juan Guaido, who invoked the constitution in January to assume an interim presidency.  Russia said Maduro remains the country’s only legitimate leader.  Meanwhile, Russian Deputy Foreign Minister, Sergei Ryabkov, said talks between the US and Russia over the crisis in Venezuela were difficult but frank.  Russia warned the US not to intervene militarily in Venezuela and said it was increasingly concerned by US sanctions on Venezuela.  He said Russia is opposed to any US attempt to use humanitarian aid pretext to intervene in Venezuela.

Reuters reported that Libya’s El Sharara oilfield is pumping around 270,000 b/d and could add another 20,000 b/d after maintenance on wells has been completed.

The provincial government of Alberta late Monday announced it will increase its crude oil production limits for May and June by 25,000 b/d in each month. The increase will result in the production ceiling reaching 3.71 million b/d by June. The government noted that the increase in production limits comes as warmer weather reduces the amount of diluent needed to help oil sands bitumen flow through pipelines.

Venezuela reported it has suspended its oil exports to India and now views Russia and China as its main export destinations. The president of PDVSA said in order to prevent a sharp reduction in exports, various measures are being implemented and diversification of the export market is underway.

Vitol reported its traded volumes of crude oil and products reached 7.4 million b/d a 2.3% increase over traded volumes the year earlier. Gasoline traded volumes were up 30% from 2017.

Early Market Call – as of 8:00 AM EDT

WTI – Apr $58.51, down 52 cents

RBOB – Apr $1.8841, down 79 points

HO – Apr $1.9809, down 97 points

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