Recap: Oil futures traded back and forth on Wednesday, with the January contract hovering around the 50-day moving average. Trading was quiet ahead of the Thanksgiving Holiday in the U.S. Thursday’s session is a shortened one due to the holiday and therefore we do not expect to see much movement in this market. Oil futures ended with a slight loss, with January WTI falling 11 cents, to settle at $78.39 a barrel, while January Brent slipped 10 cents to $82.21 a barrel. December RBOB fell 0.8% to $2.3197 a gallon, while December heating oil declined 0.1% to close at $2.383 a gallon.
Technical Analysis: Thursday’s session was lackluster, as most traders were preparing for the U.S. Thanksgiving Holiday. Most of the recent headlines have already been factored into this market, leaving traders with a wait and see attitude. As of now, we are still looking for a reach toward $85, with $70 providing a floor. This is of course barring any major new fundamentals. A push above the 10-day moving average, currently set at $78.87 could push WTI toward $80. To the downside, there is support set at $76.37 and below that at $75.
Fundamental News: Oil rebounded by almost 5% on Monday to $76 a barrel as some investors viewed Friday's sharp decline in oil and financial markets on concern about the Omicron coronavirus variant as overdone. On Friday, oil prices plunged $10 a barrel , their largest one-day drop since April 2020, as the new variant of the coronavirus spooked investors and added to concerns that a supply surplus could increase in the first quarter. WTI crude settled down $10.24 on Friday, or 13.1%, at $68.15 a barrel, declining more than 10.4% on the week in high volume trading after Thursday's Thanksgiving holiday in the United States.
Three OPEC+ sources stated that the producer group is not discussing a pause in ouptut increases despite U.S. and other stocks releases. The Wall Street Journal reported that Saudi Arabia and Russia were considering such a move while the UAE and Kuwait were not convinced a pause was necessary.
The head of the International Energy Agency, Fatih Birol, said a coordinated oil stocks release by major consuming countries was not a response by the International Energy Agency. He said some countries have not taken a helpful position in terms of oil and gas prices, saying not enough supply was reaching consumers. The IEA accused Saudi Arabia, Russia and other major energy producers of creating “artificial tightness” in global oil and gas markets.
China’s Foreign Ministry spokesman, Zhao Lijian, said China will release crude oil from its reserves according to its needs, adding that the country was in close communication with oil-producing and oil-consuming countries.
Japan's Prime Minister, Fumio Kishida, said his government would release some oil reserves in response to a U.S. request in a way that does not breach a Japanese law that only allows stock releases if there is a risk of supply disruption. Japan Industry Minister, Koichi Hagiuda, said the country will release a few hundred thousand kiloliters of oil from its national reserve, but the timing of the sale has not been decided on.
Analysts at Goldman Sachs said a coordinated release from government oil reserves led by the United States may add about 70 million to 80 million barrels of crude supply, smaller than the more than 100 million barrels the market has been pricing in. It said the oil release was a “drop in the ocean.”
IIR Energy reported that U.S. oil refiners are expected to shut in about 314,000 bpd of capacity in the week ending November 26th, increasing available refining capacity by 208,000 bpd.
Early Market Call – as of 8:45 AM EDT
WTI – Jan $72.83, up $4.69
RBOB – Dec $2.1620, up 13.19 cents
HO – Dec $2.2255, up 13.06 cents
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