Recap: Oil prices rose to their highest level in over a month, with WTI breaking above $70.00 a barrel for the first time since July 11th and Brent breaching $78.00 a barrel in as much time. The climb that began in mid- August continues to gain support from the prospect of renewed U.S. sanctions against Iran and after the bullish EIA report this week. The jump in WTI above $70.00 sparked a fresh round of buying, which took this spot contract to a high of $70.50. Gains were pared as the settlement period approached, pushing October WTI to a settlement of $70.25 a barrel, up 74 cents, or 1.06%. October Brent tacked on 63 cents, or 0.82 cents, to settle at $77.77 a barrel. September RBOB added 1.8% to nearly $2.144 a gallon and September heating oil added 0.3% to $2.248 a gallon. The September contracts expire at Friday’s settlement.
The 10-day moving average is closing in on the 50-day moving average. A cross of this shorter term average will prompt technical buying, which could push WTI toward resistance set at $71.05. Above this level, additional resistance is set at $72.15. Support is set at $69.28 and below that at $68.34.
Fundamental News: A top Iranian military official said that Iran will halt Middle East exports if it is not allowed to ship its crude through the Strait of Hormuz. He said if Iran cannot use the Strait for its oil exports, there will be no security for others either and no other crude will be exported from the region.
According to the UN’s IAEA, Iran has stayed within the main restrictions on its nuclear activities imposed by a 2015 deal with major powers. In its last report in May, the IAEA said Iran could do more to cooperate with inspectors and thereby enhance confidence but stopped short of saying Iran had given it cause for concern. Thursday’s report to member states contained similar language.
The Acting Director General of Iraq’s Oil Marketing Co, Alaa Al-Yasiri, said Iraq needs to increase crude exports and added that the country is ready to ship more as soon as OPEC agrees how members will share a collective increase. Exports in August will total about 3.595 million bpd.
Hellenic Petroleum has stopped buying Iranian crude oil since June 2018 after the US imposed sanctions on Iran. Hellenic secured supply for refineries by purchasing oil from other sources.
Russia’s oil production averaged 11.208 million bpd in the period of August 1-29. In July, Russia’s average oil production stood at 11.21 million bpd, up from 11.06 million bpd in June.
Gasoline stocks independently held in the Amsterdam-Rotterdam-Antwerp refining and storage hub in the week ending August 30th fell by 1.94% on the week and by 16.17% on the year to 757,000 tons. Gasoil stocks fell by 5.57% on the week and by 10.68% on the year to 2.441 million tons while its fuel oil stocks fell by 7.05% on the week and by 62.39% on the year to 1.028 million tons. Naphtha stocks fell by 18.24% on the week and by 12.54% on the year to 251,000 tons while its jet fuel stocks increased by 4.64% on the week and by 18.36% on the year to 677,000 tons.
Japan’s Ministry of Finance reported that the country’s crude imports in July fell by 10.2% on the year to 2.9 million bpd.
JBC Energy said further widening in the Brent-WTI spread is likely towards the fourth quarter as US/Canada crude supplies increase and the Brent market tightens.
Early Market Call – as of 8:45 AM EDT
WTI – Oct $70.01, down 24 cents
RBOB – Sep $2.0063, down 26 points
HO – Sep $2.2449, down 93 points
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