Recap: Oil prices spent most of Friday’s session trading to the downside, pressured by several factors including but not limited to a weaker equity market, strength in the dollar and Thursday’s bearish U.S. inventory report. October WTI fell as much as 1.3%, while Brent slipped 0.8% before both blends trimmed losses. Reports of Phillips 66 Bayway refinery being shut for the next 24-48 hours, coupled with front month product strength, lifted prices off their lows. A pre-settlement rally ensued, with October WTI settling at $67.75 a barrel, down 2 cents, or 0.03%, for a weekly loss of 2.9%. November Brent gaining 33 cents, or 0.43%, to settle at $76.83 a barrel, down 1% on the week.
October RBOB closed up 1% at $1.97 a gallon, a weekly loss of 1.4%. October heating oil added 0.4% to settle at $2.218 a gallon, about 1.1% lower on the week.
Fundamental News: Baker Hughes reported that US energy companies cut oil rigs for the second week in three as the rig count has stagnated over the pasts three months. It reported that drillers cut two oil rigs in the week ending September 7th, bringing the total count down to 860.
Total has booked four cargoes of gasoline from Saudi Arabia to the US Atlantic Coast, including one set to deliver September 8th, in the first such voyages in at least three years.
According to a US Commodity Futures Trading Commission report, open interest in NYMEX WTI contracts for delivery five or more years in the future has declined over the past decade, mainly due to the growth of US shale oil. Open interest in these contracts peaked at 46,158 contracts, representing about 46.2 million barrels of oil in 2008 and fell to 481 open contracts by the end of March 2018, representing just 481,000 barrels of oil. In addition, the report found that market participants have grown reluctant to engage in long-term contracts due to speculative trading restrictions put in place after the 2008 financial crisis and due to the oil price collapse in 2014 and 2015.
The US Coast Guard said eight vessels were stalled on Friday at the Sabine Pass Channel on the Texas-Louisiana border after 37-foot draft restrictions were put in place this week to allow search operations for a displaced pipeline.
An OPEC and non-OPEC technical committee will discuss proposals for sharing an oil output increase next week. A panel called the Joint Technical Committee will on Tuesday consider proposals on distributing the agreed output increase of 1 million bpd. If resolved, the talks could lead to an easing of tensions within OPEC. There are four proposals on how to distribute the increase, presented by Iran, Algeria, Russia and Venezuela. The proposals will be presented to ministers attending a monitoring meeting in Algeria on September 23rd.
IIR Energy reported that US oil refiners are expected to shut in 257,000 bpd in the week ending September 7th, increasing available refining capacity by 406,000 bpd from the previous week. IIR expects offline capacity to increase to 589,000 bpd in the week ending September 14th.
Six oil tankers were berthed at Basra Oil Port’s offshore terminals and single-point moorings and another three were waiting at anchorage. Of the six tankers, one has completed loading and another is expected to do so later on Friday. Al-Sumaria television reported that protestors in Basra demanding clean water and basic services have torched several government buildings.
Early Market Call – as of 9:15 AM EDT
WTI – Oct $68.02, up 27 cents
RBOB – Oct $1.9759, up 62 points
HO – Oct $2.2215, up 37 points
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