Recap: The crude market traded higher on Wednesday as the market remained concerned about the Israel-Hamas conflict. The market traded sideways in overnight trading ahead of the release of the EIA’s weekly petroleum stock reports. However, the market breached its previous low and sold off to a low of $82.08 following the release of the EIA report, which showed a build of more than 1.3 million barrels in crude stocks on the week. The market later bounced off its low and retraced all of its losses as it rallied to a high of $85.55 ahead of the close. The market traded higher despite the news that Israel has agreed to delay the invasion of Gaza for now. It seemed that the market was concerned that a delayed invasion would still pose a risk to oil supplies. The December WTI contract settled in positive territory for the first time in four sessions, up $1.65 at $85.39. It posted a new high of $85.56 in the post settlement period. The December Brent contract settled up $2.06 at $90.13. Meanwhile, the product markets ended the session in mixed territory, with the heating oil market settling down 1.44 cents at $3.0305 and the RB market settling up 1.66 cents at $2.2842.
Technical Analysis: The oil market is seen retracing some of its gains and trading sideways as it awaits for further developments on the Israel-Hamas conflict after Israel agreed to delay the invasion of Gaza. Its daily stochastics are also trending sideways after they crossed to the downside. The crude market is seen finding support at its low of $82.08, $81.31 and $80.20. Resistance is seen at $85.56, $86.30 followed by $88.29 and $89.85.
Fundamental News: The Wall Street Journal reported that Israel has agreed to delay the invasion of Gaza for now, so the U.S. can rush missile defenses to the region to protect its troops there. The report said Israel is also taking into account in its planning the effort to supply humanitarian aid to civilians inside Gaza, as well as diplomatic efforts to free hostages held by Hamas militants. It said threats to U.S. troops were of paramount concern.
China’s Commerce Ministry said China has set the import quota for crude oil at 243 million metric tons for non state-owned firms in 2024. The volume has remained unchanged for some years.
According to company documents, Venezuela's PDVSA has signed at least two new spot contracts to export fuel oil and asphalt cement, demanding prepayment in euros from customers as the state-run oil company begins to turn to cash sales after the U.S. eased sanctions. Last week, the U.S. issued a license allowing Venezuela to freely export crude oil, fuel and natural gas to its chosen markets in the next six months. PDVSA has since contacted its traditional customers seeking to reactivate some of its unexpired supply contracts, while negotiating prompt sales on the open market under a prepayment condition to catch much-needed cash.
IIR Energy said U.S. oil refiners are expected to shut in about 2.2 million bpd of capacity in the week ending October 27th, increasing available refining capacity by 273,000 bpd. Offline capacity is expected to fall to 1.2 million bpd in the week ending November 3rd.
Morgan Stanley sees a further 100,000 to 200,000 bpd of Venezuelan oil production by the second half of 2023, with 2024 production levels in the 900,000 to 1 million bpd range. It estimates that an additional 200,000 to 300,000 bpd of exports from Venezuela could head to the U.S. by the end of the year.
Early Market Call – as of 8:30 AM EDT
WTI – December $82.80, down 2.59
RBOB – November $2.2421, down 4.21 cents
HO – November $2.9740, down 5.65 cents
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