Recap: The crude oil market continued to sell off on Wednesday, settling lower for the third consecutive session amid the U.S. federal government shutdown that added to worries about the economy and expectations of an OPEC+ output increase in November. The market has also been pressured by the resumption of oil exports from Iraq’s Kurdistan region. The market traded mostly sideways in overnight trading, posting a high of $62.89 before it continued to sell off. The market remained pressured by expectations that OPEC+ will increase its production in November by about 500,000 bpd, despite OPEC stating that media reports of plans to increase its output by that amount were misleading. The market was also pressured by larger than expected build in crude oil stocks of over 1.7 million barrels reported on the week. The market later bounced off its low and settled in a sideways trading range. The November WTI contract settled down 59 cents at $61.78 and the December Brent settled down 68 cents at $65.35. The product markets ended the session lower, with the heating oil market settling down 2.22 cents at $2.3019 and the RB market settling down 3.64 cents at $1.8859.
Technical Analysis: The oil market is seen retracing some of its losses before it continues to trend lower on the build in crude stocks and the expectations of an OPEC+ decision to increase its output by up to 500,000 bpd in November. The market will look to further news on the geopolitical front. The crude market is seen finding support at $61.40, $61.06, $60.99 and $60.85. Meanwhile, resistance is seen at $62.89, $63.26, $63.32, $63.91, $64.50, $65.40 and $66.42.
Fundamental News: The U.S. Energy Information Administration will be able to operate for a period of time during the lapse in appropriations. Until further notice, the EIA.gov website will continue to be updated, and publications will continue to be released according to established schedules.
Russian Deputy Prime Minister Alexander Novak said that the situation with supply of fuel on the domestic market is under control on the whole, while some regions are experiencing shortages of the fuel. Several regions in Russia reported shortages of certain popular types of gasoline, including Crimea, which Russia annexed from Ukraine in 2014, as well as Nizhny Novgorod, east of Moscow. Ukraine has shut in some of Russia’s refining capacity via drone attacks.
Russia’s U.N. Ambassador, Vassily Nebenzia, said Russia does not recognize the reimposition of United Nations sanctions on Iran.
OPEC said the Joint Ministerial Monitoring Committee stressed the need for achieving full compliance with oil output agreements at its online meeting on Wednesday.
The CEO of Diamondback Energy, Kaes Van’t Hof, said U.S. oil production growth will stall if prices stay near $60/barrel, as fewer drilling sites are profitable at that level.
According to three trading sources, Russia increased its oil exports via its western ports by 25% in September versus August, as refinery outages caused by Ukrainian drone attacks freed up more crude. Exports via the western ports of Primorsk, Ust-Luga and Novorossiisk in September increased to 2.5 million bpd. Daily loadings of Urals, KEBCO and Siberian Light grades at Primorsk, Ust-Luga and Novorossiisk in September increased by 500,000 bpd, up 25% from August.
Early Market Call – as of 9:25 AM EDT
WTI – Nov $61.21, down 59 cents
RBOB – Nov $1.8633, down 2.52 cents
HO – Nov $2.2610, down 4.04 cents
