Recap: The oil market on Thursday continued to retrace Wednesday’s early losses and rallied higher on a resurgence of Middle East risk premium after drones struck Iraqi Kurdistan oil fields for a fourth day. Oil output in the semi-autonomous Kurdistan region has been cut by between 140,000 and 150,000 bpd, more than half of the region’s normal output of about 280,000 bpd. The market posted a low of $66.29 in overnight trading before it breached its previous high at $67.01 and rallied higher throughout the session. The oil market, which was well supported by drone attacks on oil infrastructure in Kurdistan and Israel’s attacks in Syria, extended its gains to $1.25 as it rallied to a high of $67.63 ahead of the close. The August WTI contract settled up $1.16 at $67.54 and continued to trend higher, posting a high of $67.69 in the post settlement period. The September Brent contract settled up $1.00 at $69.52. Meanwhile, the product markets ended the session higher, with the heating oil market settling up $7.31 cents at $2.4646 and the RB market settling up 2.64 cents at $2.1704.
Technical Analysis: The crude market will remain supported amid the concerns over the recent drone strikes on Iraqi Kurdistan oil fields and the escalation of the violence in Syria. The market will, however, remain focused on the developments on the U.S. tariffs front. Technically, the market is seen holding support at its trendline at $66.42, as stochastics are trending sideways. Further support is seen at $65.42, $65.23, $64.67, $64.50 and $64.00. Resistance is seen at $67.69, $69.50, $69.65, $71.20 and $72.90.
Fundamental News: The Kurdistan region’s counter-terrorism service said a drone attack targeted an oilfield operated by Norwegian oil and gas firm DNO in Tawke, in the Zakho Administration area of northern Iraq. The attack is the second on the DNO-operated field since a wave of drone attacks began early this week. DNO, which operates the Tawke and Peshkabour oilfields in the Zakho area that borders Turkey, temporarily suspended production at the fields following explosions that caused no injuries. This week’s drone attacks have reduced oil output from oilfields in Iraq’s semi-autonomous Kurdistan region by between 140,000 to 150,000 bpd, as infrastructure damage forced multiple shutdowns. On Wednesday, the U.S. State Department condemned recent drone attacks targeting oil fields in the Iraqi Kurdistan region.
The State Department said the United States condemns violence in Syria, calling on all parties to step back and engage in meaningful dialogue that leads to a lasting ceasefire. State Department spokesperson Tammy Bruce said that Washington was actively engaging all constituencies in Syria to navigate toward calm and continued discussions on integration and called on the Syrian government to lead the path forward. The State Department said the U.S. did not support recent Israeli action in Syria and added that the U.S. is engaging with both Israel and Syria.
The Kremlin said Russia was continuing to analyze U.S. President Donald Trump’s remarks regarding possible secondary tariffs against buyers of Russian exports.
The TASS state news agency reported that former Russian President Dmitry Medvedev said that Russia had no plans to attack NATO or Europe but added if the West escalated the Ukraine war any further, then Moscow should respond and, if necessary, launch preemptive strikes.
NBC News reported, citing current and former U.S. officials, that a new U.S. assessment has found that American strikes in June mostly destroyed one of three Iranian nuclear sites, while the other two were not as badly damaged.
Early Market Call – as of 8:30 AM EDT
WTI – Aug $68.79, up $1.17
RBOB – Aug $2.1871, up 1.45 cents
HO – Aug $2.5789, up 10.93 cents
