Recap: The oil market on Tuesday took a breather and traded lower following four consecutive days of gains amid the uncertainties caused by the war in Ukraine and the possibility of further U.S. sanctions on Russian oil. The market opened at its high of $64.76 and erased its previous gains. It retraced more 50% of its move from a low of $61.29 to a high of $65.10 as it sold off to a low of $63.13 ahead of the close. The October WTI contract settled down $1.55 at $63.25 and the October Brent contract settled down $1.58 at $67.22. The product markets ended the session slightly lower, with the heating oil market settling down 67 points at $2.2805 and the RB market settling down 26 points at $2.1323.
Technical Analysis: The crude market is seen remaining range bound as traders remain unwilling to commit themselves to either direction as they await further developments surrounding the war in Ukraine and the potential disruption in Russian supplies. The market will likely find some support from the weekly petroleum stocks reports, which are expected to show draws in crude stocks of close to 2 million barrels. The oil market is seen finding support at its low of $63.13, $62.84, $62.74 followed by $62.52, $61.83, $61.65 and $61.45. Meanwhile, resistance is seen at its high of $64.76, $65.10, $65.33, $65.71, $66.28 and $66.56.
Fundamental News: According to sources, U.S. and Russian government officials discussed several energy deals on the sidelines of negotiations this month that sought to achieve peace in Ukraine. These deals were put forward as incentives to encourage Russia to agree to peace in Ukraine and for Washington to ease sanctions on Russia. The officials discussed the possibility of Exxon Mobil re-entering Russia’s Sakhalin-1 oil and gas project. They also raised the prospect of Russia purchasing U.S. equipment for its LNG projects, such as Arctic LNG 2, which is under western sanctions. Another idea was for the U.S. to purchase nuclear-powered icebreaker vessels from Russia. The talks were held during U.S. envoy Steve Witkoff’s trip to Moscow earlier this month when he met with Russian President Vladimir Putin and his investment envoy Kirill Dmitriev. The deals were also discussed within the White House with U.S. President Donald Trump.
Ukrainian President Volodymyr Zelenskiy said that Turkey, the Gulf States or European countries could host talks with Russian President Vladimir Putin. He “From our side, things will be prepared to the maximum in order to end the war.”
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, said Iran remains committed to diplomacy and a mutually beneficial solution, following a meeting with France, Britain and Germany in Geneva about its disputed nuclear program.
Russia has revised up its crude oil export plan from western ports by 200,000 bpd in August from the initial schedule after Ukrainian drone attacks disrupted refinery operations and freed up more crude for shipment.
Enbridge reported it has eased September apportionments for both light and heavy barrels compared with August levels. The company lowered its heavy crude apportionments to 3% from August’s apportionment of 5%, while light barrels apportionments were lowered by 1% to 5% for September levels.
Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +11% w/w to 96.77 million bbl in the week ended August 22.
BloombergNEF reported that global passenger jet fuel demand for August 26th-September 1st will fall 1.1% on the week to 7.32 million bpd. However, jet fuel demand was up 3.8% on the year.
Early Market Call – as of 9:00 AM EDT
WTI – Oct $63.71, up 40 cents
RBOB – Sep $2.1448, up 98 points
HO – Sep $2.2903, up 44 points
