Recap: The oil market traded lower on Tuesday on signs of recovering crude exports from the Middle East, with the restart of the East-West pipeline in Saudi Arabia and the resumption of Red Sea oil exports. Trade sources stated that Saudi Arabia resumed oil loadings from its Red Sea port of Yanbu after restarting operations on the East-West Pipeline. In overnight trading, the oil market retraced some of Monday’s losses as it traded to a high of $94.74 after U.S. President Donald Trump said he has offered Iran nothing to end the war, rejecting media reports stating that he was willing to ease sanctions and release frozen funds for concrete steps regarding Iran’s nuclear program. However, the market erased any of its gains and sold off on the resumption of Saudi Arabia’s Red Sea oil exports. The crude market extended its losses to almost $3.54 as it sold off to a low of $89.06 ahead of the close. The November WTI contract settled down $3.22 at $89.38 and the November Brent contract settled down $2.69 at $102.89. The product markets ended the session in mixed territory once again, with the heating oil market settling up 14.26 cents at $4.8979 and the RB market settling down 5.95 cents at $3.2782.
Technical Analysis: The crude market will continue to trade within its recent trading range as the market weighs the news of crude exports from the Middle East recovering against the continuing back and forth between the U.S. and Iran as mediated talks continue with no breakthrough expected. The market is seen finding support at $89.06, $88.71, $88.67, $88.18, $85.92 and $84.24. Meanwhile, resistance is seen at $94.74, $96.54, $96.78, $97.22, $98.01 followed by $100.61 and $101.69.
Fundamental News: The Trump administration said it is offering to loan energy companies 40 million barrels of oil from the Strategic Petroleum Reserve, in an effort to control increasing fuel prices that have rallied on the widening war with Iran and Russia’s war on Ukraine.
The White House has urged the European Union to draw down emergency diesel inventories in an effort to lower global prices, as President Donald Trump and his administration pursue a range of options to ease fuel costs ahead of November’s midterm elections. According to sources, the White House is frustrated that some European countries have not lived up to commitments made earlier this year to tap their emergency oil and petroleum reserves to help address supply disruptions and price spikes stemming from the Iran conflict and disruptions to shipping through the Strait of Hormuz.
Iran’s parliamentary speaker, Mohammad Baqer Qalibaf, said no country in the region would be able to export oil if the Islamic Republic was prevented from selling its own oil. He said no regional infrastructure would be safe if Iran had no security.
IEA head, Fatih Birol, said the IEA’s member states may discuss whether more strategic oil reserves could be released on the market in the future. He said “We are following the markets very closely, especially the product markets, diesel and others. If there is a need, of course, we will discuss with our member governments to take the necessary steps.”
Valero Energy Corp reported flaring at its 85,000 bpd Wilmington, California refinery due to unplanned maintenance.
BP Plc said it is proposing a six year contract term that would provide stability for the Whiting refinery and employees. It is proposing an extended notice period before the union can strike or before the company can initiate a lockout. BP said it will continue to meet with USW-71 representatives to find common ground as negotiations progress.
Early Market Call – as of 9:10 AM EDT
WTI – Nov $90.68, up $1.28
RBOB – Oct $3.3295, up 5.13 cents
HO – Oct $5.1235, up 22.56 cents
