Recap: The crude market on Thursday continued to trend lower, posting yet another low as it continued to wait for further developments in the Middle East. The market was also pressured in light of some less than supportive news regarding China’s housing sector plan that is not expected to induce enough investment demand to support its economy. The oil market posted a high of $71.11 in overnight trading and traded mostly sideways in light of the APIs showing draws across the board. The EIA’s oil inventory report also showed draws in crude stocks of 2.2 million barrels, compared with expectations of a build. The crude market posted a low of $69.44 in afternoon trading after Israel said that Hamas leader Yahya Sinwar, the architect of the October 7th attack on Israel last year, has been killed in Gaza. The November WTI contract later bounced off that level and settled up 28 cents at $70.09, while the December Brent contract settled up 23 cents at $74.45. The product markets ended the session in positive territory amid the draws in stocks, with the heating oil market settling up 1.98 cents at $2.1945 and the RB market settling up 65 points at $2.0468.
Technical Analysis: The oil market on Friday is seen remaining in its recent trading range ahead of the weekend. The market is seen holding its support following the oil inventory reports, which showed draws across the board and as the market awaits for further news regarding Israel’s retaliatory attack against Iran. The market is seen finding support at its low of $69.44 followed by $67.82, $66.33, $64.99 and $64.61. Meanwhile, resistance is seen at its high of $71.11, $71.31, $72.12, $73.05, $74.08 and $75.12.
Fundamental News: The EIA reported that U.S. weekly oil field production increased by 100,000 bpd to a record 13.5 million bpd during the week ending October 11th. It reported gasoline stocks fell by 2.2 million barrels on the week, with inventories in the Gulf Coast falling to the lowest level since March 2021.
JP Morgan forecast global oil consumption will increase by 7.1 million bpd or 7% between 2023 and 2035 to 108.5 million bpd.
The U.S. Department of Defense said U.S. military forces, including U.S. Air Force B-2 bombers, conducted precision strikes against five underground weapons storage locations in Houthi-controlled areas of Yemen. It said the strike was designed to further degrade the Houthis’ capability to continue their destabilizing behavior and to protect and defend U.S. forces and personnel.
The commander of Iran’s Revolutionary Guards, Hossein Salami, warned Israel against attacking the Islamic Republic in retaliation for its missile attack on October 1st, as the Israeli military stepped up its offensive in Lebanon against Tehran-backed Hezbollah. Meanwhile, Hezbollah member of parliament Hassan Fadlallah said the armed group would keep fighting, but he reiterated its leaders are carefully coordinating with Lebanon’s speaker of parliament in efforts to reach a ceasefire.
Colonial Pipeline Co is allocating space for Cycle 61 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina. The current allocation is for the pipeline segment north of Collins, Mississippi. Colonial Pipeline Co is also allocating space for Cycle 61 shipments on Line 2, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.
The EPA reported that the U.S. generated fewer renewable blending credits in September versus the month prior. It reported that about 1.21 billion ethanol (D6) blending credits were generated last month, compared with about 1.32 billion in August. Credits generated from biodiesel (D4) blending fell to 671 million in September from 724 million in October.
Early Market Call – as of 8:10 AM EDT
WTI – Nov $70.69, up 2 cents
RBOB – Nov $2.0478, up 10 points
HO – Nov $2.1916, down 29 points
