Recap: The crude market continued to sell off on Friday as concerns over demand outweighed expectations that the Fed’s decision to cut interest rates would cause an increase in consumption. The market’s sentiment has been weighed on by concerns about weakening demand amid signs of an oversupply in U.S. fuel product inventories and planned production increases from OPEC+. The oil market posted a high of $63.65 in overnight trading before it breached its previous low and continued on its downward trend. The market sold off to a low of $62.60 by mid-day and settled in a sideways trading range during the remainder of the session. The October WTI contract, which retraced more than 62% of its move from a low of $61.69 to a high of $64.76, settled down 89 cents at $62.68 and the November Brent contract settled down 76 cents at $66.68. The product markets ended the session lower, with the heating oil market settling down 4.11 cents at $2.2989 and the RB market settling down 4.07 cents at $1.9707.
Technical Analysis: The oil market will likely retrace some its sharp losses and trade sideways ahead of the October contract’s expiration at the close on Monday. While the market focused on demand concerns, its losses will remain limited by the geopolitical tensions, after Russia violated Estonia’s airspace on Friday and the safety zone of a drilling platform in the Baltic Sea. The market is seen finding support at $62.60, $62.52, $61.69 and $61.45. Meanwhile, resistance is seen at $63.65, $64.55, $64.67, $64.76, $65.72 and $66.03.
Fundamental News: The Kremlin said it presumed that U.S. President Donald Trump was still pursuing efforts to achieve a settlement to the Ukraine conflict despite President Trump’s statement that Russian President Vladimir Putin let him down through his actions.
The United Nations Security Council on Friday did not adopt a draft resolution to permanently lift sanctions on Iran, but Iran and key European powers still have eight days to try and agree to a delay.
The Wall Street Journal reported that the European Union proposed sanctions against Chinese and other foreign companies buying Russian oil, as part of a package of measures intended to show President Trump the bloc is increasing economic pressure on Russia and its backers. The EU also would impose new banking sanctions, black list additional companies aiding Russia’s military and speed up its plan to phase out purchases of Russian liquefied natural gas. The measures will need the backing of all 27 member states. European Commission President Ursula von der Leyen said Friday that the EU would go after oil traders, petrochemical companies and refineries in third countries, including China, that buy oil in breach of the price cap. The EU would black list another 118 vessels that are suspected of shipping Russian oil and ban transactions by Russian oil giants Rosneft and Gazpromneft. It also would sanction additional Russian banks and foreign banks that help finance Russian firms. The EU would ban purchases of LNG at the end of 2026, a year earlier than planned.
Baker Hughes said U.S. energy firms this week added oil and natural gas rigs for a third consecutive week for the first time since February. It reported that the oil and gas rig count increased by three to 542 in the week ending September 19th, its highest level since July. Baker Hughes said oil rigs increased by two to 418 this week, while gas rigs held steady at 118.
Iraq has given preliminary approval to a plan to resume pipeline oil exports from its semi-autonomous Kurdistan region through Turkey following delays to a restart. The deal between Iraq’s federal government, the Kurdistan Regional Government and international oil companies could add at least 230,000 bpd of fresh supplies at a time OPEC producers are increasing output to regain market share.
IIR Energy said U.S. oil refiners are expected to shut in 787,000 bpd of capacity in the week ending September 19th, cutting available refining capacity by 190,000 bpd.
Early Market Call – as of 9:15 AM EDT
WTI – Oct $61.98, down 74 cents
RBOB – Oct $1.9524, down 1.56 cents
HO – Oct $2.2746, down 2.76 cents
