The oil market on Friday fell for the second consecutive session

Recap: The oil market on Friday fell for the second consecutive session, pressured by increasing output from Libya and the concerns that the increasing coronavirus infections may slow a recovery in the economy and impact fuel demand.   While the news of the vaccine earlier this week provided some support to the market, oil demand is not expected to get significant support from vaccines until 2021, according to the IEA.  The crude market opened at its high of $40.94 and traded lower throughout the session.  A Libyan oil source said Libya’s oil production has increased to 1.2 million bpd, up from 1 million bpd reported on November 7th.  The market also remained pressured by the unexpected build in crude oil inventories reported on Thursday by the EIA. The December crude contract sold off to a low of $40.09 and settled down 99 cents at $40.13. The January Brent contract settled down 75 cents at $42.78.  The product markets also settled in negative territory, with the heating oil market settling down 2.91 cents at $1.2042 and the RBOB market settling down 3.17 cents at $1.1254. 

Technical AnalysisThe crude market is seen trending lower as the rising number of new infections prompt tougher restrictions on mobility and impact demand.  Technically, the oil market is seen finding support at its lows of $40.09 and $39.41 followed by more distant support at $37.06.  Meanwhile, resistance is seen at its high of $40.94, $42.19 and $43.06.

Fundamental News: The head of Democratic U.S. President-elect Joe Biden’s coronavirus advisory board, Dr. Vivek Murthy, said there was no plan to shut the country down and that the new administration’s approach will be targeted at specific areas.   He said doctors have learned a lot about how the virus spreads and what steps to reduce risk are effective. He said the Biden team’s priority will be to stop the spread of the virus and focus on hard-hit populations like nursing homes and prisons. Increasing testing capacity will be key to those efforts.

Two OPEC+ sources stated that compliance of OPEC+ with oil production cuts in October was estimated at 101%. The compliance assessment will be reviewed and confirmed by a meeting of the OPEC+ Joint Technical Committee on Monday. 

A Libyan oil source said Libya’s oil production increased to 1.215 million bpd.  The country's National Oil Corporation said on November 7th that the country’s production had reached 1.04 million bpd.

Baker Hughes reported that the oil and gas rig count increased by 12 to 312 in the week ending November 13th.  U.S. oil rigs increased by 10 to 236 this week, their highest since May, while gas rigs increased two to 73.

IIR Energy said U.S. oil refiners are expected to shut in 4.1 million bpd of capacity in the week ending November 13th, increasing available refining capacity by about 271,000 bpd from the previous week. 

U.S. producer prices increased more than expected in October, but were unlikely to translate into higher inflation given considerable slack in the labor market and a resurgence in new coronavirus cases.  The Labor Department reported that the producer price index for final demand increased 0.3% in October after rising 0.4% in September.  In the 12 months through October, the PPI increased 0.5% after rebounding 0.4% in September.  The producer price index, excluding food and energy components increased by 0.1% in October compared with an increase of 0.4% in September. 

U.S. consumer sentiment unexpectedly fell in early November due to the outcome of the presidential election and a resurgence in COVID-19 infections. The University of Michigan’s survey of consumer sentiment in November is estimated at 77, down from a final reading of 81.8 in October.

Early Market Call – as of 8:50 AM EDT

WTI – Dec $41.85, up $1.71

RBOB – Dec $1.1654, up 4 cents

HO – Dec $1.2455, up 4.13 cents

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