The Market Was Supported By the IEA’s Oil Demand Growth Forecast and An Unexpected Decline in U.S. Inventories

Recap:  The crude market on Friday posted an inside trading day as it retraced some of Thursday’s sharp gains and settled down 0.27% on the day. However, the market, which settled on Thursday at a level not seen since November 2nd, ended the week 3.88% higher after it was supported by the IEA’s oil demand growth forecast and an unexpected decline in U.S. inventories. The oil market posted the day’s trading range by mid-day, as it traded to a low of $80.49 in overnight trading and rallied to a high of $81.45. The market later settled in a sideways trading range during the remainder of the session. The April WTI contract settled down 22 cents at $81.04 and the May Brent contract settled down 8 cents at $85.34. Meanwhile, the product markets ended higher, with the heating oil market settling up 1.82 cents at $2.7270 and the RB market settling up 1.75 cents at $2.7208.

Technical Analysis:  The oil market is likely entering a period of consolidation as it awaits for further direction. The market will continue to weigh economic concerns, with worries that the Federal Reserve will not be able to cut interest rates as inflation remains above the Fed’s 2% target, and supportive demand growth forecasts and the geopolitical concerns. The market is seen finding resistance at its highs of $81.45, $81.62 followed by $82.00, $82.61, $83.71 and $84.66. Meanwhile, support is seen at its lows of $80.49, $79.57, followed by $77.57, $77.34, $76.79 and $76.56. Further support is seen at $75.84, $75.52-$75.49 and $75.36.

Fundamental News:  J.P. Morgan analysts said they “Believe Russia can maintain oil exports at current levels through June even as it cuts 500,000 bpd of crude production.” It said a fall in Russian exports could cause price pressure of additional $5/barrel to their forecast of $88-$90 by May and mid-$80s in the second half of the year.

Israeli Prime Minister Benjamin Netanyahu’s office described the latest proposals for a hostage deal by Hamas as unrealistic but said a delegation would leave for Qatar to discuss Israel’s position on a potential agreement. The office said Prime Minster Netanyahu approved plans for a military operation in Rafah and said the army was preparing operational issues and the evacuation of the civilian population.

Earlier, Egypt’s President, Abdel Fattah al-Sisi, said the country is seeking to reach a deal for a ceasefire in Gaza, increase entry of aid and to allow displaced people in the south of the enclave to move to the north. He also warned against the danger of an Israeli incursion into the city of Rafah, where an estimated 1.5 million people have sought shelter next to Gaza's border with Egypt. Aid officials have warned of looming famine in the coastal enclave. On Thursday, Egypt's Foreign Minister called on Israel to open land crossings with Gaza to let in more aid.

Yemen's Houthis said that the group launched an attack on "Pacific 01" ship in the Red Sea with missiles on Friday. The group’s military spokesperson said Houthis used drones to attack a U.S destroyer.

Baker Hughes reported that U.S. energy firms this week added oil and natural gas rigs for the third time in four weeks. It reported that the oil and gas rig count increased by seven to 629 in the week ending March 15th. The number of oil rigs increased by six on the week to 510 and the number of natural gas rigs increased by 1 on the week to 116.

IIR Energy reported that U.S. oil refiners are expected to shut in about 1.1 million bpd of capacity in the week ending March 15th, increasing available refining capacity by 561,000 bpd.

Early Market Call – as of 8:15 AM EDT

WTI – April $80.90, up 32 cents

RBOB – April $2.7460, up 2.52 cents

HO – April $2.7619, up 3.41 cents

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