Recap: The oil market continued to trend higher on Wednesday amid concerns over Russian crude supplies and a draw in crude inventories. The market was lifted after U.S. President Donald Trump increased its rhetoric against Russia and made a shift in Ukraine’s favor, stating that he believed Ukraine could retake all the territory captured by Russia. The crude market was also supported by news that Ukraine’s military struck two oil pumping stations overnight in Russia and a state of emergency was declared in the Russian city of Novorossiisk, which is Russia’s major seaport on the Black Sea and contains major oil and grain export terminals. The oil market traded mostly sideways in overnight trading, posting a low of $63.25. However, the market bounced off that level and never looked back. The market was further lifted during the session in light of the EIA report showing draws across the board. The market rallied to a high of $65.05 ahead of the close. The November WTI contract settled up $1.58 at $64.99 and the November Brent settled up $1.68 at $69.31. The product markets ended the session higher, with the heating oil market settling up 4.92 cents at $2.3772 and the RB market settling up 1.97 cents at $2.0188.
Technical Analysis: The crude market traded on Thursday will likely retrace some of its sharp gains before it continues on its upward trend amid the continuing geopolitical tension. The market will remain supported by concerns over Russia’s oil supplies as Ukraine continues to attack Russia’s oil infrastructure and President Trump increases its rhetoric against Russia. He reiterated the need for Europe to cut its energy purchases from Russia and has proposed that the Group of Seven allies impose tariffs as high as 100% on China and India for their purchases of Russian oil. The market will look for further updates on the possible restart of Kurdish oil exports. Resistance is seen at $65.05, $65.19 and $65.43. More distant resistance is seen at $67.56. Meanwhile, support is seen at $63.74, $63.33, $62.92, $61.85, $61.61, $61.42, $61.06 and $60.99.
Fundamental News: The Kremlin rejected the central arguments for U.S. President Donald Trump’s U-turn on the war in Ukraine. On Tuesday, U.S. President Trump said he believed Ukraine could retake all its land controlled by Russia and that Ukraine should act now with Moscow facing “big” economic problems, in a sudden rhetorical shift in Ukraine’s favor. The Kremlin countered that the Russian economy was stable, despite problems in some sectors caused by sanctions, and that Russian forces’ slow advance in Ukraine was part of a deliberate strategy rather than a sign of weakness. Russian nationalists and political insiders interpreted his shift as a sign that he was washing his hands of the war in Ukraine after his unsuccessful and unrealistic attempts to broker a quick peace deal. They noted that he had not promised any more U.S. help to Kyiv, but rather placed the onus squarely on Ukraine itself and the European Union. The Kremlin said that Russian Foreign Minister Sergei Lavrov would hold talks with U.S. Secretary of State Marco Rubio later on Wednesday.
Iran’s Oil Minister, Mohsen Paknejad, said the triggering of the United Nations snapback mechanism won’t add “new burdensome restrictions” on Iran’s oil sales, as Tehran and European powers struggle to reach a deal to prevent the return of U.N. sanctions this week.
The Association of the Petroleum Industry of Kurdistan said eight oil companies operating in Iraqi Kurdistan, representing over 90% of production, reached agreements in principle with Iraq’s federal and Kurdish regional government to resume oil exports.
IIR Energy said U.S. oil refiners are expected to shut in 1 million bpd of capacity in the week ending September 26th, cutting available refining capacity by 249,000 bpd. Offline capacity is expected to increase to about 1.2 million bpd in the week ending October 3rd.
Early Market Call – as of 8:25 AM EDT
WTI – Nov $64.50, down 31 cents
RBOB – Oct $1.9967, down 1.77 cents
HO – Oct $2.3873, up 1.39 cents
