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Market Intel Archives

OPEC's Joint Ministerial Monitoring Committee did not come to an agreement regarding output cut on Friday

September 25, 2017

Recap: The November crude futures on Friday, posted an inside trading day after the Joint Ministerial Monitoring Committee, comprised of Algeria, Kuwait, Venezuela, Russia and Oman, did not make a recommendation on whether OPEC and non-OPEC producers should extend their output cut agreement beyond March 2018.  The market traded to a high of $50.78 in overnight trading.  However, as it failed to breach Thursday’s high of $50.81, the market erased its gains and sold off to a low of $50.29.  The oil market later bounced off its low and traded in a 40 cent trading range ahead of the close as it attempted to test its highs.  The November WTI contract settled up 11 cents at $50.66, while the November Brent contract settled up 43 cents at $56.86.  The product markets settled in positive territory, with the heating oil market settling up 10 points at $1.8163 and the RBOB market settling up 2.46 cents at $1.6684.

Fundamental News: Kuwait’s Oil Minister, Essam al-Marzouq, said that the oil market was well on its way towards rebalancing.  He said the backwardation in the oil market was a sign of declining inventories.  He also stated that Libya and Nigeria will contribute to the supply cut deal once their production stabilizes.  He stated that OPEC and the other producers will likely wait until the next meeting to decide on whether to extend the oil output cut deal. 

Venezuela’s Oil Minister, Eulogio Del Pino, said OPEC and other oil producers are evaluating all options in their efforts to reduce an oversupply, including extending their agreement to cut supplies that is due to expire in March.  He said the oil market was recovering very strongly. 

Russia’s Energy Minister, Alexander Novak, said OPEC and other oil producers will not make a decision until January on whether to extend their agreement to cut production.  He called on the countries who are not in full compliance with the oil supply cut deal to reach their targets.  He also stated that OPEC and other oil producers need to continue coordinated action and work on a strategy from April 2018.  He said OECD oil inventories had fallen to 3 billion barrels in August, while crude oil in floating storage had been falling since June. 

Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said the country’s production is currently averaging 1.69 million bpd, below its 1.8 million bpd limit it agreed to under the OPEC and non-OPEC output cut agreement.  He said the oil producers will deal with an oil supply cut extension in March, if there is a need for an extension.  He also added that he would be happy to end the year with an oil price of $60/barrel.

A Libyan oil source stated that the country’s national oil production stood at about 900,000 bpd, down from about 1 million bpd in recent months. 

Baker Hughes reported that the number of rigs drilling for oil in the US fell by five to 744 in the week ending September 22nd. 

IIR reported that US oil refiners are expected to shut in 1.792 million bpd of capacity in the week ending September 22nd, increasing available refining capacity by 1.018 million bpd from the previous week.  IIR expects offline capacity to fall to 1.011 million bpd in the week ending September 29th and to 1.007 million bpd in the following week. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.22, up 56 cents

RBOB - Oct $1.6827, up 1.46 cents

HO -Oct $1.8294, up 1.28 cents


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Oil market traded in and out of positive territory on conflicting signals regarding OPEC output cut agreement

September 22, 2017

Recap: On its first trading session as the spot contract, the November crude futures retraced some of its previous gains.  The market posted a low of $50.07 in overnight trading before it bounced off its low and rallied to a high of $50.81 by mid-day.  The market traded in and out of positive territory on conflicting signals from OPEC ministers about whether an extension of its current output cut agreement is on the table for Friday’s Joint Ministerial Monitoring Committee meeting.  While Kuwait’s Oil Minister stated that the OPEC/non-OPEC coalition was not ready to discuss an extension, Algeria’s Oil Minister said an extension would be discussed at the meeting.  The November crude contract settled down 14 cents at $50.55 while the November Brent contract settled up 14 cents at $56.43.  The product markets ended mixed, with the heating oil market settling up 83 points at $1.8153 and the RBOB market settling down 1.13 cents at $1.6438.   

Fundamental News: Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, September 19th increased by 462,063 barrels on the week and by 375,407 barrels from Friday, September 15th to 62,378,207 barrels. 

Kuwait’s Oil Minister, Essam Al-Marzouq, said that compliance with the OPEC-led oil output cuts was very good and above 100%.  He also stated that the OPEC/non-OPEC coalition was not ready to discuss an extension of the deal, which currently calls for producers to reduce their output by 1.8 million bpd until March 2018.  The Joint Ministerial Monitoring Committee, which Kuwait’s Oil Minister chairs, is scheduled to discuss compliance and review market conditions on Friday.  Separately, an OPEC delegate said no common position has emerged on how long any extension of the supply cuts should last.   

Algeria’s Energy Minister, Mustapha Guitoni said OPEC would discuss extending the deal with non-OPEC producers. 

Russia’s Energy Minister, Alexander Novak, said OPEC and non-OPEC countries will discuss a monitoring procedure for oil exports at a meeting in Vienna. 

Iran’s President, Hassan Rouhani, said the nuclear deal between the Iran and the six world powers is good and cannot be renegotiated.  US President, Donald Trump, called the deal an embarrassment during his first speech at the UN on Tuesday. 

Germany’s Foreign Minister, Sigmar Gabriel, said any US move to abandon the Iranian nuclear deal would discourage other powers such as North Korea from negotiating an end to their own nuclear program. 

According to Euroilstock, European refining crude intake in August fell by 1.7% on the month and by 2% on the year to 10.557 million bpd.  Europe’s refinery output in August fell by 1.3% on the month and by 0.8% on the year to 11.153 million bpd.  It reported that European gasoline output increased by 0.9% on the month but fell by 3% on the year to 2.49 million bpd while its middle distillates output fell by 2.2% on the month and by 3.2% on the year to 5.652 million bpd.

Gasoline stocks independently held in Amsterdam-Rotterdam-Antwerp terminal in the week ending September 21st fell by 2.16% on the week but increased by 14.47% on the year to 815,000 tons.  Gasoil stocks fell by 1.71% on the week and by 18.28% on the year to 2.589 million tons. 

Early Market Call - as of 9:30 AM EDT

WTI - Nov  $50.50, down 5 cents

RBOB - Oct $1.6588, up 1.51 cents

HO -Oct $1.8152, down 7 cents 


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October crude contract settled in a sideways trading pattern before the EIA's weekly stock report

September 21, 2017

Recap: On its last trading session, the October crude contract posted a low of $49.75 in overnight trading and settled in a sideways trading pattern ahead of the release of the EIA’s weekly petroleum stock report.  The market later attempted to test its low following the release of the report, which showed a larger than expected build in crude stocks of close to 4.6 million barrels on the week.  However, the oil market bounced off its lows and rallied higher to $50.65 as traders seemed to dismiss the larger than expected build in stocks in light of the refinery closures following Hurricane Harvey.  Meanwhile, the November crude contract breached its previous highs from $50.85 to $50.88, as it rallied to a high of $51.11 in afternoon trading.  The October crude contract went off the board up 93 cents at $50.41 while the November contract settled up 79 cents at $50.69.  The product markets ended in positive territory, with the heating oil market settling up 3.44 cents at $1.8070 and the RBOB market settling up 1 point at $1.6551. 

Fundamental News: US President Donald Trump said he made a decision on whether the US will remain in the 2015 Iran nuclear pact but declined to reveal it as Iran promised not to be first to violate the deal.  The US President must decide by October 15th whether to certify that Iran is complying with the deal.  If he does not, the US Congress has 60 days to decide whether to reimpose sanctions waived under the agreement.   The prospect of the US reneging on the agreement has worried some US partners that helped negotiate it. 

Algeria’s Energy Minister, Mustapha Guitouni, said OPEC will discuss extending its production cut deal with non-OPEC producers to defend crude prices when they meet in Vienna on September 22nd. 

The joint OPEC/non-OPEC technical committee estimates that OPEC and other producing countries in August delivered 116% of their pledged oil output cuts.  It is up from 94% compliance in July. 

Exports of Nigeria’s Qua Iboe crude are expected to fall to 158,000 bpd in November.  The November loading program includes five cargoes, down from seven in October. 

Abu Dhabi National Oil Co has informed buyers in Asia it will reduce supplies of its Murban crude by 15% in November to comply with the OPEC and non-OPEC production cut agreement.  The cut for Murban supplies was slightly deeper than the 10% reduction in October because of oilfield maintenance.  It will also cut November Das crude supplies by 10% and Upper Zakum crude by 5%. 

Angola added four cargoes to its provisional loading program for November on Wednesday, bringing the total up to 48 cargoes or 1.54 million bpd.  It is lower than October’s loading program of 56 cargoes or 1.57 million bpd. 

Wood Mackenzie stated that production at the Permian Basin could peak as early as 2021 due to geological constraints.  It forecast that production in the Permian Basin will increase to more than 5 million bpd in 2025.  October production is pegged at 2.64 million bpd, according to the EIA.  

IIR reported that US oil refiners are expected to shut in 1.8 million bpd of capacity in the week ending September 22nd, increasing available refining capacity by 1.047 million bpd from the previous week.  IIR expects offline capacity to fall to 992,000 bpd in the week ending September 29th. 

Early Market Call - as of 9:09 AM EDT

WTI - Nov  $50.34 down 35 cents

RBOB - Oct $1.6369 down 1.82 cents

HO -Oct $1.8077  up 7 points


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Oil market finished down ahead of release of API and EIA weekly petroleum stock reports

September 20, 2017

Recap:  The oil market continued to trade within last Thursday’s trading range for the third consecutive session on Tuesday.  The market traded mostly sideways overnight before it breached its previous high and rose to $50.42 on the dollar’s weakness and comments made by Iraq’s Oil Minister that the country and other OPEC producers may be open to extending OPEC’s production cut agreement through next year.  The crude market, which failed to test its resistance at $50.50, gradually erased its gains and sold off to a low of $49.33 late in the session.  The market traded lower ahead of the release of the API and EIA weekly petroleum stock reports due out on Tuesday afternoon and Wednesday morning, respectively.  The reports are expected to show a build in crude stocks of 2.4 to 2.9 million barrels on the week.  The October WTI contract settled down 43 cents at $48.48 while the November Brent contract settled down 34 cents at $55.14.  The product markets ended in negative territory, with the heating oil market settling down 70 points at $1.7726 and the RBOB market settling down 1.36 cents at $1.655.       

Fundamental News Bloomberg reported that crude oil inventories held in Cushing, Oklahoma are estimated to have increased by 900,000 barrels in the week ending September 15th to 58.2 million barrels. 

Nigeria’s Oil Minister and the head of Libya’s state oil company are set to attend a joint meeting between OPEC and non-OPEC countries on Friday to discuss the progress of their deal to limit output.  Ministers from Kuwait, Venezuela, Algeria, Russia and Oman are already scheduled to meet on Friday in Vienna to discuss the current situation in the oil market.  No decision on cuts are expected at the meeting.    

Iraq’s Oil Minister, Jabbar al-Luaibi, does not believe there is a need for more output cuts but added that if there was a need for more cuts in the future, Iraq would support consensus within OPEC.  He said oil-producing countries taking part in global output cuts believe they should reduce supply by an additional 1% to help rebalance the market.  He also stated that some favor extending cuts until the end of 2018.  He said they are considering various options to extend their output cut deal, including 3-9 month extensions.  There is no firm decision yet on further cuts or any extension of the current reductions. 

Goldman Sachs reported that global oil demand growth remained strong through the second quarter at 2.25 million bpd, the second highest quarterly growth rate since 2010.  It stated that while July-August data has been softer, it still implies high demand growth and is coming in line with its 3Q forecast of 1.66 million bpd.  It increased its 2017 global oil demand growth forecast to 1.675 million bpd.  For 2018, its global real GDP growth and Brent price forecasts of 3.8% and $58/barrel led it to increase its demand growth forecast to 1.51 million bpd from a previous forecast of 1.45 million bpd.   

Societe Generale forecast Brent prices at $51.55/barrel for 2017 an $50/barrel for 2018.  It forecast WTI at $48.80/barrel for 2017 and $47.50/barrel for 2018. 

Philadelphia Energy Solutions is transporting Bakken crude from North Dakota to its 335,000 bpd refinery via rail for the first time since May, as strong refining margins have opened the crude-by-rail arbitrage.  The widening of the WTI/Brent spread is seen as the main driver for railroads moving higher volumes from the Williston Basin to the US Atlantic Coast over the shorter term.  Volumes moved on rail cars in July were estimated at 95,705 bpd to 125,705 bpd, down slightly from June.  US Midwest refineries are sourcing higher supplies of the lighter Bakken barrels to produce gasoline and diesel. Bakken crude has also been sent by barge from the US Gulf to the USAC. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Oct $50.02, up 53 cents

RBOB - Oct $1.6563, up 13 points

HO - Oct $1.7804, up 78 points


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Oil market posted an outside trading day on Monday following the inside trading day on Friday

September 19, 2017

Recap: After the oil market posted an inside trading day on Friday, the market breached its previous range and posted an outside trading day on Monday.  The market traded to $50.33 in overnight trading, breaching a previous high of $50.13, early in the session before it gave up any of its gains.  It breached its previous low and retraced almost 38% of its move from a low of $47.00 to a high of $50.50, as it sold off to a low of $49.19 by mid-day.  The market, however, bounced off its low and rallied back towards the $50 level ahead of the close.  The October WTI contract settled at $49.91, up 2 cents, while the November Brent contract settled at $55.48, down 14 cents.  Meanwhile, the product markets ended the session mixed, with the heating oil market settling down 1.92 cents at $1.7796 and the RBOB market settling up 69 points at $1.6686.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending September 15th increased by 675,812 barrels on the week and by 86,656 barrels from Tuesday, September 12th to 62,002,800 barrels.

According to the Joint Organizations Data Initiative, Saudi Arabia’s crude oil exports in July fell to 6.693 million bpd from 6.889 million bpd in June.  Saudi Arabia’s crude oil production fell by 60,000 bpd on the month to 10.01 million bpd in July.  Meanwhile, its crude stocks fell by 844,000 barrels to 255.706 million barrels in July.  Saudi Arabia’s domestic crude throughput increased by 110,000 bpd to 2.687 million bpd in July. 

Royal Dutch Shell declared force majeure on exports of Nigeria’s Bonny Light crude due to the shutdown of one of the two export pipelines.  The force majeure declaration went into place on September 16th following the shutdown of the Nembe Creek Trunk Line. 

Colonial Pipeline said that Port Arthur, Texas refiners can use their own pumps as a temporary solution to get gasoline and other products into its main lines.  Traders said that while Colonial’s move may help resume shipments from Port Arthur, flow rates through the line overall would still likely remain low until repairs are complete.  Repairs at the Port Arthur injection point are expected to last through the end of the month. 

Bloomberg reported that total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle increased by 85% on the week to 1.12 million bpd in the week ending September 14th.  It reported that exports from Houston increased by 191% to 983,637 bpd. 

JBC Energy said the price of Brent crude may rise to $60/barrel on sentiment and a short squeeze, but sustaining the price at that level is a different story, with fundamentals justifying prices between $50-$55/barrel. 

The EIA stated that shale oil production from seven major US oil plays is expected to see a monthly increase of 79,000 bpd to 6.083 million bpd.  Oil output from the Permian Basin is expected to see the largest increase, with an increase of 55,000 bpd.  Oil output at Eagle Ford shale play is expected to fall by 9,000 bpd. 

ExxonMobil Corp may restart most of the production units at its 362,300 bpd Beaumont, Texas refinery by the end of the week after the refinery was shut on August 30th due to Hurricane Harvey.  The refinery’s two crude distillation units resumed operations on Friday.  It also restarted its 40,000 bpd diesel hydrotreater.  Its 65,000 bpd hydrocracking unit was restarted on Sunday.  The refinery’s 45,000 bpd coking unit is expected to achieve full production levels by the last week of September. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $50.30, up 40 cents

RBOB - Oct $1.6659, down 32 points

HO -Oct $1.7888, up 89 points
 

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Oil market posted inside trading day on Friday after trading higher throughout the week

September 18, 2017

Recap: After trading higher for four consecutive sessions, the oil market posted an inside trading day on Friday.  The market traded in and out of positive territory as the market consolidated following the market’s strong gains while traders took profits ahead of the weekend.  The crude market posted a low of $49.41 in overnight trading and rallied to a high of $50.13 early in the session.  The market later erased some of its gains and traded in a 40 cent trading range during the remainder of the session.  The October WTI contract ended the session flat at $49.89 but gained about 5.1% on the week.  The November Brent settled up 15 cents at $55.62.  Meanwhile, the product markets ended the session in positive territory, with the heating oil market settling up 2.13 cents at $1.7988 and the RBOB market settling up 3.3 cents at $1.6617.

Fundamental News: Baker Hughes reported that the number of rigs searching for oil in the week ending September 15th fell by 7 to 749, the lowest level since the week ending June 16th.  US drillers cut the most oil rigs in the week since January.

Phillips 66 chartered a foreign flagged vessel carrying a gasoline cargo this week.  It was making use of a temporary waiver of the Jones Act that was put in place to meet fuel shortages in the wake of Hurricane Harvey and Irma.  The vessel departed from Houston, Texas on September 9th and was docked near the company’s Alliance refinery in Louisiana.

China’s Unipec is shipping its first Very Large Crude Carrier cargo of diesel from China to Europe.  This is part of the company’s plans to expand into Europe as China looks to new markets for its excess fuel. 

Colonial Pipeline Co is allocating space for Cycle 54 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.

Oil Movements reported that OPEC shipments are expected to fall by 280,000 bpd to 23.93 million bpd in the four weeks ending September 30th compared with the previous four week period ending September 2nd. 

A BNP Paribas oil strategist reported that non-OPEC total supply growth for 2018 is now seen at 1.5 million bpd, rather than 1.4 million bpd. 

JBC Energy forecast that US crude exports are likely to increase beyond 1 million bpd on a weekly basis within the next few weeks to a new high in October, as seasonal refinery maintenance is expected to free up more crude for export.  Volumes will continue increasing as the wider Brent/WTI spread had improved arbitrage economics out of the US Gulf and can offset costs of lightering crude to VLCCs. 

IIR reported that US oil refiners are expected to shut in 2.429 million bpd of capacity in the week ending September 15th, increasing available refining capacity by 1.227 million bpd from the previous week.  IIR expects offline capacity to fall to 1.144 million bpd in the week ending September 22nd. 

According to Bloomberg, global refinery outages reached 4.77 million bpd on Friday.  It  is down from 5.6 million bpd the previous week as the impact of Hurricane Harvey continues to recede.  US outages totaled 2.4 million bpd, compared with 3.2 million bpd over the same period.

North Dakota’s Industrial Commission reported that oil production in the state increased by 15,000 bpd to 1.048 million bpd in July. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.67, down 22 cents

RBOB - Oct $1.6627, up 5 points

HO -Oct $1.7825, down 1.63 cents


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Oil market continued to build on gains made on Wednesday

September 15, 2017

Recap: The oil market on Thursday continued to trend higher and posted a high not seen since August 1st, building on solid gains made on Wednesday.  The market remained supported a day after the IEA forecast that the oil market would continue to tighten as fuel demand increased.  It revised up its 2017 world oil demand growth to 1.6 million bpd from a previous estimate of 1.5 million bpd.  The crude market extended its gains to $1.20 as it rallied to a high of $50.50 early in the session.  It later erased some of its gains during the remainder of the session, trading back towards the $49.50 level.  The October WTI settled up 59 cents or 1.2% at $49.89 and the November Brent settled up 31 cents or 0.56% at 55.47.  Meanwhile, the product markets were mixed, with the heating oil market settling up 90 points at $1.7775 and the RBOB market settling down 1.86 cents at $1.6287.

Fundamental News: According to the EIA’s International Energy Outlook for 2017, global demand for petroleum and other liquid fuels will increase by nearly 20% by 2040, driven by the transportation and industrial sectors.  Consumption is expected to increase from 95 million bpd in 2015 to 104 million bpd in 2030 and 113 million bpd in 2040.  Countries outside the Organization for Economic Cooperation and Development account for most of the increase, with demand increasing by 1.3% per year.  Meanwhile, renewables will remain the world’s fastest growing energy source, with consumption increasing by an average 2.3% a year between 2015 and 2040. However, fossil fuels will remain the dominant energy source, accounting for 77% of energy use in 2040.  Global consumption of natural gas is expected to increase 1.4% annually.

Libya’s Sharara oilfield is producing about 180,000 bpd, 100,000 bpd below recent levels due to security issues.  Workers at the field said a facility about 25 miles west of the field was shut due to poor security, hindering the recovery of production since the field reopened after a pipeline blockade this month. 

Kazakhstan’s President, Nursultan Nazarbayev, said the country will support future efforts to increase the price of crude.  He said the price of Brent at $52-$55/barrel, satisfies everyone and added that the country will maintain its solidarity in order to support the price. 

BP’s Chief Executive, Bob Dudley, said oil prices are expected to hold between $50 and $60/barrel as high global stocks fall following the OPEC and non-OPEC output cut agreement. 

US Secretary of State, Rex Tillerson, said he was hopeful that China would come to its own decision to use the “powerful tool” of oil supplies to persuade North Korea to reconsider its current path towards weapons development and its approach to talks and negotiations in the future. 

Venezuela’s Economy Vice President, Ramon Lobo, said the country will make all pending debt payments despite a series of difficulties that have arisen as a result of financial sanctions by the US.  The sanctions did not block banks from serving as intermediaries in debt payments, but the government of President Nicolas Maduro has stated that they are interfering with the country’s finances and threatening to lead it toward default. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending September 14th fell by 4.8% on the week but increased by 8.89% on the year to 833,000 tons.  Gasoil stocks fell by 3.87% on the week and by 18.12% on the year to 2.634 million tons while its fuel oil stocks fell by 14.87% on the week but increased by 75.12% on the year to 1.265 million tons. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.82, down 7 cents

RBOB - Oct $1.6417, up 1.3 cents

HO -Oct $1.7886, up 1.08 cents


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Oil prices rose despite a reported increase of U.S. crude oil inventories

September 14, 2017

Recap: Oil prices rose on Wednesday despite a larger than expected build in U.S. crude oil inventories. According to the EIA, crude stocks increased 5.9 million barrels, much greater than the expected 3.2 million barrels. Overshadowing the EIA report, was another report put out by the International Energy Agency, stating that the global surplus was showing signs of waning, while at the same time, output by OPEC and some other major producers was decreasing. While this was supportive for prices, the increase in U.S. stockpiles kept a lid on prices. October WTI gained $1.07, or 2.22%, to settle at $49.30, while Brent for November delivery settled at $55.16, up 89 cents or 1.64%.

October RBOB fell about a penny to $1.647 a gallon, while October heating oil added 2.8 cents, or 1.6%, to $1.769 a gallon.

Fundamental NewsThe IEA reported that the global oil surplus is beginning to deplete due to stronger than expected European and US demand growth, as well as production declines in OPEC and non-OPEC countries.  It raised its 2017 global oil demand growth estimate to 1.6 million bpd from 1.5 million bpd.  It stated that increased demand in industrialized countries was a key factor behind global demand increasing by 2.3 million bpd in the second quarter, the highest quarterly year on year increase since mid-2015.  In regards to supply, global oil production fell by 720,000 bpd in August due to unplanned outages and scheduled maintenance in Libya as well as non-OPEC countries such as Russia, Kazakhstan, Azerbaijan, Mexico and in the North Sea.  It was the first decline in global production in four months.  OPEC’s oil output fell in August by 210,000 bpd to 32.67 million bpd.  The 12 OPEC members bound by the output cut agreement increased their compliance to 82% in August from 75% in July.  OECD commercial stocks were unchanged in July at 3.016 billion barrels.  The IEA also stated that for the third quarter, its refinery throughput forecast was revised down by 700,000 bpd due to Hurricane Harvey’s impact.  This resulted in a global refined product undersupply for the second consecutive quarter.  In the fourth quarter, refinery throughput is expected to reach 80.9 million bpd as refiners respond to higher margins in the tight product markets.

Kuwait’s Oil Minister, Essam al-Marzouq, said that OPEC could hold an extraordinary meeting in mid-March if it does not reach a decision to extend oil supply cuts when it next meets in November.  Meanwhile, Venezuela’s Oil Minister, Eulogio Del Pino, said that all options are open regarding the global cuts agreement, which is expected to in March 2018.  He also said his country would price is crude oil sales in currencies other than the US dollar, such as the Chinese yuan and Indian rupee. 

The Wall Street Journal reported that although no countries have publicly challenged Saudi Arabia’s Oil Minister, Kalid al-Falih, shift in rhetoric that all option are open in OPEC’s efforts to rebalance world oil markets, OPEC ministers see cutting exports as a tough sell.  

Iran’s Oil Ministry news site, SHANA, said Iran will take any necessary steps to ensure the stability of the oil market after meeting his Venezuelan counterpart, Eulogio Del Pino in Tehran.  They discussed a possible extension of the OPEC supply cuts until June 2018.

IIR reported that US oil refiners are expected to shut in 2.156 million bpd of capacity in the week ending September 15th, increasing available refining capacity by 1.426 million bpd in the previous week.  IIR expects offline capacity to fall to 608,000 bpd in the week ending September 22nd. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.90, up 60 cents

RBOB - Oct $1.6473, unchanged

HO - Oct $1.7797, up 1.13 cents

 

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Oil prices rose after OPEC incresed their demand forecast for 2018

September 13, 2017

Recap:  Oil prices rose after OPEC reported a decline in production for the month of August, as well as increased their demand forecast for 2018. Prices drifted higher within a narrow range, under moderate volume. October WTI held above the 50-day moving average of $47.56 and gained momentum above $47.85, the 10-day moving average, to achieve a high of $48.44. Gains were pared, with this spot contract settling at $48.23 a barrel, up 16 cents, or 0.33%. Brent closed up 34 cents, or 0/80%, to settle at $54.27 a barrel.  

October RBOB gained 2.18 cents, or 1.38%, to settle at $1.6563 a gallon, while October heating oil settled at $1.7406 a gallon, down .0021 cents, or 0.12%.

Fundamental News Bloomberg reported that crude oil stocks held in Cushing, Oklahoma increased by 1.6 million barrels to 59.63 million barrels in the week ending September 8th.

OPEC and its allies are discussing extending the oil production cuts that expire in March 2018 by more than three months, potentially bringing them well into the second half of next year.  One option under discussion is a six-month extension. 

Russia’s Energy Minister, Alexander Novak, met with his Venezuelan counterpart, Eulogio Del Pino, on Tuesday to discuss a global deal to limit oil output. 

In its monthly report, OPEC raised the estimate for the amount of crude it will need to supply next year amid a stronger outlook for global oil demand.  It increased its 2018 forecast by 400,000 bpd to 32.8 million bpd on increased demand estimates for Europe and China.  OPEC increased its global oil demand estimates for 2015 through 2018.  It raised its 2018 forecast by 400,000 bpd to 98.1 million bpd.  As a result, the growth rate expected for next year also increased by about 100,000 bpd to 1.35 million bpd.  It reported that non-OPEC oil production in August fell by 320,000 bpd on the month to 57.68 million bpd.  US oil output fell by 70,000 bpd as production from the Gulf of Mexico and parts of Eagle Ford was partially disrupted by Hurricane Harvey.  OPEC oil production averaged 32.76 million bpd in August, down 79,000 bpd on the month.  Crude output increased in Nigeria, while production fell in Libya, Gabon, Venezuela and Iraq.  OPEC’s compliance with its output cut pledge stands at 83%, down from 86% initially reported for July. 

In its Short Term Energy Outlook, the EIA cut its 2017 world oil demand growth forecast by 70,000 bpd to 1.35 million bpd.  However, it increased its oil demand growth estimate for 2018 by 80,000 bpd to 1.69 million bpd.  World oil demand in 2017 and 2018 is estimated to total 98.26 million bpd and 99.95 million bpd, respectively.  It reported that OPEC production in 2017 is expected to decline by 200,000 bpd to 32.49 million bpd and increase by 500,000 bpd to 32.99 million bpd in 2018.  Meanwhile, total US petroleum demand in 2017 is expected to increase by 350,000 bpd to 19.98 million bpd and increase by 40,000 bpd to 20.38 million bpd in 2018.  Gasoline demand in 2017 is expected to remain unchanged at 9.33 million bpd but increase by 40,000 bpd to 9.37 million bpd in 2018.  Distillate demand in 2017 is estimated to increase by 110,000 bpd to 3.99 million bpd and increase by 80,000 bpd to 4.07 million bpd in 2018. 

Pemex has ordered a record 619,000 bpd of gasoline in September, as there is no restart date for its Salina Cruz refinery while Houston area refiners are still attempting to fully resume operations. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct $48.74, up 51 cents

RBOB - Oct $1.6546, down 15 points

HO - Oct $1.7477, up 69 points


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Oil prices continued to fall as traders evaluated impact of Hurricane Irma on demand

September 12, 2017

Recap: Oil prices began Monday’s session with an extension of Friday’s losses as traders evaluated demand destruction caused by Hurricane Irma. WTI fell to $47 a barrel, its lowest level in a week, while Brent created a double bottom around $53 a barrel. Losses were eradicated after news broke that Motiva had restarted production at its Port Arthur, TX refinery. Prices climbed above unchanged, in what was a moderately traded session. October WTI gained 59 cents, or 1.27%, to settle at $48.07 a barrel, while November Brent tacked on 6 cents, or 0.11%, to settle at $53.84 a barrel.

October RBOB fell 1.3 cents, or 0.8%, to $1.635 a gallon, while October heating oil settled at $1.743 a gallon, down 2.3 cents, or 1.3%.

Fundamental NewsSaudi Arabia’s Energy Minister, Khalid al-Falih, agreed with his Venezuelan and Kazakh counterparts to leave all options open in their effort to rebalance world oil markets, including the possible extension of output cuts beyond next March.  Separately, Saudi Arabia’s Energy Minister agreed with his UAE counterpart, Suhail al-Mazroui, that an extension of an agreement on global oil supply cuts beyond March 2018 may be considered depending on market fundamentals. 

Saudi Arabia will supply full contracted volumes of crude to at least five north Asian term buyers in October, while a sixth regional refiner was notified of cuts to its October Arab Extra Light supplies.  The October allocations are in contrast to the steep cuts in the September allotments and reaffirms the country’s desire to maintain its Asian market share.  Saudi Arabia plans to cut crude allocations to its customers worldwide in October by 350,000 bpd.   

Saudi Aramco will add 1.9 million barrels or 300,000 kiloliters of crude to storage that it holds in Japan.  The move comes as Japan from this month raises the crude storage capacity that it lends for free to Saudi Aramco by 30% to 8.2 million barrels.  The extra storage will help Saudi Arabia as it battles to keep customers in northern Asia.  In return for providing free storage on the southern islands of Okinawa, Japan gets a priority claim on the stockpiles in case of an emergency.  Saudi Arabia currently holds a total of 6.3 million barrels of crude in Japanese storage. 

According to Bloomberg, total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle increased by 986.4% on the week to 610,507 bpd in the week ending September 7th. 

Euroilstock reported that the crude intake at Europe’s refineries fell in August by 2% on the month and by 2.4% on the year to 10.514 million bpd.  European crude and oil products stocks in August increased by 0.4% on the month but fell by 1.4% on the year to 1.149 billion barrels.  European crude oil stocks in August fell by 0.4% on the month but increased by 1.1% on the year to 495.6 million barrels while its gasoline stocks increased by 2.6% on the month but fell by 0.4% on the year to 114.16 million barrels and its middle distillates stocks increased by 1.1% on the month but fell by 3% on the year to 445.73 million barrels.  European fuel oil stocks fell by 0.2% on the month and by 10.2% on the year to 69.03 million barrels in August while naphtha stocks fell by 5.2% on the moth but increased by 1.8% on the year to 24.2 million barrels in August. 

RBC Capital Markets cut its oil forecasts by about $6/barrel for 2018 and said caution is needed.  It sees WTI averaging $49.30/barrel this year and $53/barrel next year and Brent at $52.50/barrel in 2017 and $55.50/barrel next year. 

JBC Energy said deep cuts in Saudi crude shipments to the US in October may be a logistical response as Gulf Coast refiners will probably have a backlog of crude after runs were halted or reduced in August and September after Hurricane Harvey hit Texas. 
 

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $48.19, up 13 cents

RBOB - Oct $1.65007, up 1.64 cents

HO -Oct $1.7419, down 2 points


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