Recap: Oil prices fell on Tuesday after a report by the ISM showed U.S. manufacturing activity falling to 47.8, its lowest level in 10-years and the second straight month, and as Ecuador announced that it plans to leave OPEC. While this is not a heck of a lot of oil, it means that Ecuador will no longer be tied to OPEC’s production agreement. A reading below 50 indicates contraction. Prices were also pressured by a loss in equities. November WTI slipped as much as $1.05, or 1.8%, to a session low of $53.05 a barrel before trimming losses for a settlement of $53.62 a barrel, down 45 cents or 0.83%. Brent for December delivery fell 36 cents, or 0.61%, to settle at $58.89 a barrel. WTI, based on front-month contract prices, saw a 1.9% monthly decline, and lost 7.5% for the quarter. Brent scored a 0.6% monthly climb, but ended down 8.7% for the quarter. November RBOB added 0.5% to $1.5737 a gallon and November heating oil shed nearly 0.1% to $1.8985 a gallon.
Technical Analysis: The 10-day moving average continues to close in on the 200-day moving average, indicating near term weakness. Should this shorter term average cross below the longer term, we will most likely see a fresh round of selling enter the market, with the potential of reaching $50.52, the level at which prices took off from. Below this level, additional support is set at $49.80. To the upside, resistance is set at $55.00 and above that at $55.52.
Fundamental News: Two more petrochemical companies in Saudi Arabia, Sadara and Advanced Petrochemical Co., announced over the weekend that feedstock supplies from Saudi Aramco have returned to normal levels. Late last week, six of Saudi Arabia’s petrochemical firms said feedstock ethane supplies from Saudi Aramco returned to normal. Feedstock supplies were cut to Saudi petrochemical companies after the attacks on Saudi Aramco oil facilities on September 14th.
Iraqi oil exports fell to 3.576 million b/d in September, down from 3.603 million b/d exported in August according to the Iraqi oil ministry.
The US EIA reported that Canada sent 366,290 bpd of crude by rail into the US in July, the highest level in six months, as Alberta continues to ease production curtailments.
TC Energy plans to restart prepatory work for construction of the stalled 830,000 bpd Keystone XL heavy oil pipeline, however two environmental groups have asked a Montana court to block the activities.
The Minnesota Public Utilities Commission said Enbridge is required to submit a final environmental impact assessment for its Line 3 pipeline within 60 days. It requested the inclusion of analysis of a potential oil spill into Lake Superior watershed.
Canada’s energy regulator ordered Enbridge to halt an open season that offered contracted space on its Canadian Mainline system.
US President, Donald Trump, said US interest rates were “too high” and that a strong dollar was hurting US manufacturers. He said the Federal Reserve and its chairman, Jay Powell, allowed the dollar to get so strong that manufacturers are being negatively affected.
Early Market Call – as of 7:30 AM EDT
WTI – Nov $53.86, up 24 cents
RBOB – Nov $1.5745, up 9 points
HO – Nov $1.9007, up 20 points
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