Recap: The crude market traded mostly sideways on Wednesday as the market weighed optimism over a meeting between U.S. President Donald Trump and China’s President Xi Jinping on Thursday and an expected increase in OPEC+ quotas in December. The market traded sideways in overnight trading before it briefly breached its previous low and posted a low of $59.70. However, the market bounced off its low as its losses were limited by the API report, which showed large draws across the board, with draws in crude stocks of 4 million barrels for the week ending October 24th. The market settled in a sideways trading range ahead of the release of the EIA’s weekly petroleum stocks report. The oil market rallied to a high of $61.02 early in the afternoon in light of the EIA reporting large draws in oil stocks, with a draw of 6.9 million barrels reported in crude stocks. The market later erased some of its gains ahead of the close, with the December WTI contract settling up 33 cents at $60.48 and the Brent contract settling up 52 cents at $64.92. The product markets ended the session higher, with the heating oil market settling up 3.71 cents at $2.4243 and the RB market settling up 4.85 cents at $1.9737.
Technical Analysis: The oil market is seen remaining supported by the large inventory draws. It will look for further direction from the outcome of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping on Thursday. The market will also keep an eye on the impact of the sanctions imposed on Russia’s Lukoil and Rosneft. The market is seen finding support at $59.70, $59.64, $59.28, $58.49, $57.34 and $56.58. Meanwhile, resistance is seen at $61.02, $61.50, $62.17 and $62.59.
Fundamental News: The EIA reported that U.S. crude oil stocks, gasoline and distillates inventories fell last week. Crude inventories fell by 6.86 million barrels to 416 million barrels in the week ending October 24th. Crude oil imports fell by 867,000 bpd on the week to 5.051 million bpd, the lowest level since February 2021. U.S. Gulf Coast crude oil imports fell 477,000 bpd to 597,000 bpd, the lowest level on record. The EIA reported that U.S. weekly oil field production increased by 15,000 bpd to a record 13.6 million bpd.
U.S. President Donald Trump began the final leg of his Asia trip in South Korea on Wednesday. Ahead of a dinner hosted by South Korean President Lee Jae Myung, U.S. President Donald Trump said a trade deal had been struck with South Korea. President Trump is optimistic about striking a trade war truce with China’s President Xi Jinping during a meeting on Thursday. He said he expects to reduce tariffs on Chinese goods in exchange for Beijing’s commitment to curb exports of fentanyl precursor chemicals. The Wall Street Journal said the United States could halve the levies of 20% on Chinese goods it now charges in retaliation for the export of such chemicals.
Meanwhile, China’s Foreign Ministry announced Chinese President Xi Jinping will meet with his U.S. counterpart Donald Trump in South Korea’s Busan on October 30th. China’s Foreign Ministry said they will exchange views on bilateral relations and issues of mutual interest. The ministry said the meeting of the two leaders would “inject new momentum into the development of U.S.-China relations”, and Beijing was ready to work together for “positive outcomes”.
Wood Mackenzie said that global oil demand will not peak until 2032, two years later than previously forecast. Wood Mackenzie said in its Energy Transition Outlook report said that rising dependence on fossil fuels due to increased power demand from artificial intelligence and to geopolitical tensions have led to 2050 net zero goals becoming unattainable. Demand for liquid hydrocarbons is expected to peak at 108 million bpd in 2032 with natural gas demand remaining resilient well into the 2040s.
IIR Energy said U.S. oil refiners are expected to shut in about 981,000 bpd of capacity in the week ending October 31st, increasing available refining capacity by 111,000 bpd.
Early Market Call – as of 8:35 AM EDT
WTI – Dec $60.08, down 28 cents
RBOB – Nov $1.9580, down 1.66 cents
HO – Nov $2.4031, down 1.97 cents
