Recap: The crude oil market posted an inside trading day on Thursday as it retraced some of its losses after U.S. economic data allayed fears of an imminent recession. The market bounced higher on the opening and posted a low of $76.93, still holding support at Wednesday’s low of $76.83. The market retraced most of its previous losses as it posted a high of $78.60. It was supported as data showed U.S. retail sales increased more than expected in July and another report showed a smaller than expected increase in the number of Americans filing for unemployment benefits. Data showing U.S. consumer prices increased moderately in July reinforced expectations that the Federal Reserve will cut interest rates next month and lent support to the market. However, the market erased some of its gains ahead of the close. The September WTI contract settled up $1.18 at $78.16 and the October Brent contract settled up $1.28 at $81.04. The product markets settled in positive territory, with the heating oil market settling up 97 points at $2.3779 and the RB market settling up 3.69 cents at $2.3580.
Technical Analysis: The oil market will remain rangebound within its recent trading range as stochastics are trending sideways. The market is seen remaining supported by concerns over how Iran will respond to the killing of the leader of the Palestinian militant group Hamas last month. The market is seen finding resistance at $78.60, $79.10, $80.15-$80.16, $81.34, $82.27-$82.29, $82.50 and $83.58. Meanwhile, support is seen at $76.93, $76.83, $73.70, $75.91, $75.85, $74.91 and $74.60.
Fundamental News: The White House urged all sides to attend Gaza ceasefire talks in Doha in order to get a deal implemented, urging Israel and Hamas to compromise and saying progress is still possible in coming days. White House national security spokesman, John Kirby, also said information shows Iran has not moved off its threat to attack Israel, including potentially through proxies. He said the U.S. is watching the situation closely and is prepared, though “hopefully it doesn’t come to that”.
The U.S. EIA said China’s diesel demand fell by 11% year over year to 3.9 million barrels per day in June, the biggest percentage decline since July 2021. According to the EIA, diesel consumption reached an all-time high in China last year but demand has dropped sharply since the second quarter this year. The decline is largely due the country’s ailing property sector that has slowed economic growth and that liquefied natural gas is replacing diesel in heavy-duty trucks.
Libyan company Waha Oil confirmed Wednesday a fire had broken out on its Gazout-Es Sider crude oil pipeline link on Tuesday and was extinguished Tuesday night. As a result, the company has curbed crude flows through the pipeline as it conducts maintenance on the impacted line, some 30 km from the port of El Sider. Repairs were expected to last several days.
The EPA reported that the U.S. generated more renewable blending credits in July versus the previous month. It reported that about 1.33 billion ethanol blending credits were generated in July compared with 1.21 billion in June. Credits generated from biodiesel blending fell to 826.9 million in July from 827.2 million in June.
Early Market Call – as of 8:20 AM EDT
WTI – Sep $76.27, down $1.89
RBOB – Sep $2.3138, down 4.41 cents
HO – Sep $2.3272, down 5.07 cents