Recap: The crude market continued to trend higher on Monday following a drone attack on the Caspian Pipeline Consortium, while OPEC+ agreed to leave oil output levels unchanged for the first quarter of next year. The market, which posted a low of $58.83 on the opening, traded higher in overnight trading, posting a high of $59.97, on the news that one of three mooring points at the Caspian Pipeline Consortium’s Novorossiisk terminal had been damaged causing a temporary halt in operations. Also, the market was well supported after the OPEC+ meeting on Sunday reaffirmed its plan to pause production increases in the first quarter. The market also remained supported by U.S.-Venezuela tensions after President Donald Trump on Saturday said “the airspace above and surrounding Venezuela” should be considered closed. However, the oil market erased some of its gains, following the news that some loadings were continuing at the Novorossiisk terminal, and traded back towards its low, where it continued to hold support. The market traded back towards $59.60 and settled in a sideways trading range during the remainder of the session. The January WTI contract settled up 77 cents at $59.32 and the January Brent contract settled up 79 cents at $63.17. The product markets ended the session higher, with the heating oil market settling up 3.69 cents at $2.34 and the RB market settling up 4.74 cents at $1.8689.
Technical Analysis: The oil market will likely trend sideways as the market remains supported by U.S.-Venezuela tensions, which has caused some uncertainty. It will also keep an eye on any further Ukrainian drone attacks on oil infrastructure. The market is seen finding support at its low of $58.83, $58.27, $57.66, $57.10 followed by $56.33 and $55.99. Meanwhile, resistance is seen at $59.97, $60.03, $60.34, $60.70, $60.85, $61.01, $61.18, $61.60 and $61.84.
Fundamental News: Russia’s Deputy Prime Minister, Alexander Novak, said that the situation on the global oil market is stable on the whole, though there is some volatility and risks related to geopolitics. He also said that oil demand is lower in the winter season.
Ukraine’s President Volodymyr Zelenskiy said tough issues have yet to be resolved after U.S. and Ukrainian officials held talks in Florida. In Paris, Ukraine’s President received a show of support from French President Emmanuel Macron on Monday, and will head to Ireland on Tuesday. Ukraine’s Defense Minister was due in Brussels for meetings with NATO. Meanwhile, U.S. envoy, Steve Witkoff was headed to Moscow, where he will meet Russian President Vladimir Putin on Tuesday.
BP said its Olympic Pipeline system returned to full service over the weekend following a leak first reported in early November. It said nearly 2,300 gallons of refined products had been recovered as of Saturday, but the total amount of leaked product was still being assessed.
IIR Energy reported that U.S. oil refiners are expected to shut in about 54,000 bpd of capacity in the week ending December 5th, increasing available refining capacity by 133,000 bpd. Offline capacity is expected to remain unchanged at 54,000 in the week ending December 12th.
On Friday, the EIA reported that U.S. crude oil output in September increased to a record high of 13.844 million bpd from 13.8 million bpd in August. Oil output in New Mexico reached a record 2.351 million bpd, while output from the federal offshore Gulf region increased to 1.983 million bpd in September, the highest level since February 2020. U.S. crude oil exports in September increased to 4.159 million bpd from 3.52 million bpd in August.
Early Market Call – as of 8:20 AM EDT
WTI – Jan $59.17, down 34 cents
RBOB – Jan $1.8522, down 1.88 cents
HO – Jan $2.3330, down 1.32 cents
