Recap: The oil market on Monday posted an outside trading as the market was well supported by optimism over the pace of coronavirus vaccinations in the U.S. and news that the Yemen's Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at Saudi targets, including towards Saudi Aramco refineries in Jubail and Jeddah. The market was also supported by a cyberattack on Iran’s Natanz nuclear site. While these were reasons for the market to trade higher, market players have remained cautious as Europe, India and some emerging markets, have seen vaccine rollouts that have been slower than expected. The crude market posted a low of $58.73 in overnight trading and rallied to a high of $60.77 early in the session. The market however, retraced some of its early gains and traded back towards the $59.50 level during the remainder of the session. The May WTI contract settled up 38 cents at $59.70 while the June Brent contract settled up 33 cents at $63.28. Meanwhile, the product markets settled slightly higher, with the heating oil market settling up 4 points at 1.8080 and the RBOB market settling up 79 points at $1.97.
Technical Analysis: The crude market is seen continuing to trade within its recent trading range. As previously stated, breaks over $62.27 will likely see the market trend higher, with upside seen at $64.88, while breaks below $57.25 will likely see the market trend towards the $55 level. More distant support is seen at $53.
Fundamental News: Yemen's Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at Saudi targets, including towards Saudi Aramco refineries in Jubail and Jeddah.
Descartes Lab reported that U.S. gasoline demand fell by 1.2% to 9.32 million bpd in the week ending April 9th. Demand has increased more than 1.8 million bpd since the Texas freeze in mid-February cut demand.
U.S. imports of European gasoline increased to the highest level in almost a month during the week ending April 8th. Weekly gasoline arrivals from Europe increased to 455,000 bpd, up from 359,000 bpd in the previous week. Twelve tankers discharged about 2.86 million barrels in the U.S. Atlantic Coast area and one cargo of 326,000 barrels arrived in the Gulf Coast. Meanwhile, the U.S. received one European jet fuel shipment of 126,000 barrels in the week ending April 8th, the first cargo since the week ending February 25th.
The amount of crude oil held around the world on tankers that have been stationary for at least 7 days fell to 105.81 million barrels in the week ending April 9th. It is down 1% from 106.9 million barrels held in the week ending April 2nd.
The number of VLCCs being used for floating storage of oil has fallen to its lowest level since at least May 26, 2020. The total number of VLCCs fell by 12 on the week to 30.
Saudi Arabia will meet most Asian customers' requirements for May-loading crude after some buyers had asked for lower volumes partly because of refinery maintenance and higher prices. The demand for lower volumes comes just as the Saudi Arabia is set to phase out additional voluntary production cuts over the next few months under plans agreed by the Organization of the Petroleum Exporting Countries and their allies including Russia to ease supply cuts.
IIR Energy reported that U.S. oil refiners are expected to shut in 1.8 million bpd of capacity in the week ending April 16th, increasing available refining capacity by 234,000 bpd from the previous week.
Early Market Call – as of 9:07 AM EDT
WTI – May $60.38 up 68 cents
RBOB – May $1.9824 up 1.24 cents
HO – May $1.8164 up 84 points
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