Prices gathered support off of strong economic growth in China and an unexpected fall in U.S. crude oil stocks

Recap: Brent oil reached a fresh high for the year, trading above $72.00 a barrel for the first time since mid-November, while WTI advanced above $64.00 a barrel to a session high of $64.61. Prices gathered support off of strong economic growth in China and an unexpected fall in U.S. crude oil stocks. An in-depth look at the EIA inventory report showed that product inventories weren’t quite as supportive, which in turn diminished the bullish effect of the aforementioned economic news and the drop in crude oil stocks. Trading remained choppy, with both Brent and WTI bouncing around the unchanged level, but by 12:45 EST prices resumed to the down side. May WTI settled at $63.76 a barrel, down 29 cents, or 0.45%, while Brent for June delivery fell 10 cents, or 0.14%, to settle at $71.62 a barrel. May RBOB settled at $2.0418 a gallon, down .0101, or 0.49%, while May heating oil fell .0130, or 0.64%, to settle at $2.0692 a gallon.

Technical Analysis: WTI failed to sustain itself above $64.00, indicating hesitancy to the upside, and as result we should see continued sideways trading. As with this type of pattern, we typically see a resumption of the previous trend, which in this case is to the upside. That being said, we would look for attempts to trade above $65.00. Above this level, additional resistance is set at $67.50, with $70.00 in the realm of possibilities. Support set at $63.22 and below that at $62.00. 

Fundamental News: Russia’s Energy Minister, Alexander Novak, said it was too early to speak about preferable options in regards to its position on extending the OPEC and non-OPEC output cut agreement.  He said the deal should be aimed at balancing the global oil market but should not be designed to achieve a certain oil price level.  He also stated that Russia’s average oil output in April should be in line with the global output cut agreement.

According to a preliminary loading program, Angola’s crude oil exports are expected to fall in June to 38 cargoes due to a shutdown at the Saturno field during that month.  Angola’s export program in May was set at 48 cargoes.

The semi-official Mehr news agency reported that Iran has shut around a dozen oil wells in its oil-rich southwestern Khuzestan province because of massive floods, leading to a fall of between 15,000 bpd and 20,000 bpd in oil production. 

IIR Energy reported that US refiners are expected to shut in 1.2 million bpd of capacity in the week ending April 19th, increasing available refining capacity by 109,000 bpd from the previous week.  The offline capacity is expected to fall to about 1.1 million bpd in the week ending April 26th. 

According to the US Census Bureau, US crude oil exports reached 2.99 million bpd in February, up from 2.575 million bpd in January. 

Indian refiners are increasing their planned purchases from OPEC countries, Mexico and the US to make up for any loss of Iranian oil if the US enforces sanctions more harshly from next month.  All four Indian state-owned refiners that buy Iranian oil are confident of securing additional barrels from other producers.  India’s Bharat Petroleum Corp and Mangalore Refinery and Petrochemicals Ltd have tapped Iraq to make up for Iranian oil, while Indian Oil Corp has signed its first annual contract with US suppliers and raised supplies from Mexico.  Indian Oil Corp will cut its Iranian oil imports to 6 million tons or 120,000 bpd in the 2019/20 period from 9 million tons in 2018/19, and has raised the optional volumes it can buy from other producers to 2 million tons.  Last year, MRPL signed its first annual deal with Iraq to buy 1.5 million tons of Basra oil in 2019.  BPCL has signed an agreement to buy 5 million tons of Iraqi oil in 2019, compared with 1.5 million tons in 2018.  BPCL recently purchased Brazilian crude and plans to buy Mexican crude as well.

Early Market Call – as of 8:35 AM EDT

WTI – May $63.98, up 22 cents

RBOB – May $2.0568, up 1.56 cents

HO – May $2.0765, up 76 points

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