The Oil Market on Friday Continued on its Upward Trend as Geopolitical Tensions in the Middle East Outweighed the IEA’s Forecast

Recap: The oil market on Friday continued on its upward trend as geopolitical tensions in the Middle East outweighed the IEA’s forecast released on Thursday showing slowing demand. Gaza’s largest functioning hospital was under siege in Israel’s war with Islamist group Hamas, as warplanes struck Rafah, the largest refuge for Palestinians. Meanwhile, Hezbollah chief, Hassan Nasrallah, said the group will escalate its fight with Israel as the country’s war with Hamas continues. The oil market traded mostly sideways in overnight trading and posted a low of $77.22 early in the morning. However, the market bounced off that level and retraced its earlier losses. The market breached its previous highs as it posted a high of $79.24 in afternoon trading. The market remained well supported ahead of the long Presidents’ Day holiday weekend, with the March WTI contract settling up $1.16 at $79.19 and the April Brent contract settling up 61 cents at $83.47. The product markets ended the session mixed, with the heating oil market settling down 1.71 cents at $2.8066 and the RB market settling up 1.77 cents at $2.3360.

Technical AnalysisFollowing the Presidents’ Day holiday weekend, the market on Tuesday will remain driven by the headlines regarding the situation in the Middle East. The market is technically seen trending higher as its stochastics are still pointing higher. The market is seen finding upside as its high of $79.35, $79.56 and $80.08. Further upside is seen at $81.07 and $82.04. Meanwhile, support is seen at $77.22, $75.78, $75.54, $73.56, $73.23, $72.38 and $71.41.

Fundamental NewsThe U.S. State Department said an Indian-bound tanker carrying crude oil has been attacked with a missile in the Red Sea. Earlier, the United Kingdom Maritime Trade Operations agency and British maritime security firm Ambrey said a Panama-flagged tanker had reportedly been hit 72 nautical miles northwest of the port of Mokha, off Yemen.

Baker Hughes reported that U.S. energy firms this week cut the number of oil and natural gas rigs operating for the second time in three weeks. It reported that the oil and gas rig count fell by two to 621 in the week ending February 16th. Baker Hughes said U.S. oil rigs fell by two to 497, while gas rigs were unchanged at 121.

IIR Energy reported that U.S. oil refiners are expected to shut in about 2.3 million bpd of capacity in the week ending February 16th, cutting available refining capacity by 257,000 bpd. Offline capacity is expected to fall to 1.8 million bpd in the week ending February 23rd, and further to 1.2 million bpd in the week ending March 1st.

The Teamsters union said it wants to negotiate a new contract with Marathon Petroleum for its members at the 140,000 bpd Detroit refinery without having to go on a strike. There are 270-280 Teamsters working at the refinery in a variety of roles, of which 273 workers voted to authorize a strike at the Detroit refinery on Thursday, with their most recent contract having expired last month.

Motiva Enterprises has delayed restarting the large coker at its 626,000 bpd Port Arthur, Texas refinery for at least a week of needed repairs after a planned overhaul. Valves on the 110,000 bpd DCU-2 coker are being repaired and welding is being done on the coke drums. DCU-2 was scheduled to restart by Thursday. The refinery's 350,000 bpd VPS-5 crude distillation unit was shut along with the coker for a planned overhaul on January 8th. VPS-5 was restarted on February 8th.

Early Market Call – as of 8:30 AM EDT

WTI – March $79.20, up 1 cent

RBOB – March $2.3026, down 3.34 cents

HO – March $2.7899, down 1.67 cents

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