Recap: Oil futures moved up on Wednesday, following a U.S. government report that showed domestic crude supplies up a fourth straight week, but by less than the six million-barrel jump reported by a trade group the day before. According to the EIA, U.S. crude oil inventories rose by 1.4 million barrels for the week ending November 15. December WTI added $1.90, or 3.4%, to settle at $57.11 a barrel. The day’s dollar and percentage rise was the biggest since Nov. 1, according to Dow Jones Market Data. January Brent gained 1.49, or 2.5%, to settle at $62.40 a barrel. December RBOB rose 3.3% to $1.6563 a gallon and December heating oil added 1.9% to $1.8921 a gallon.
Technical Analysis: Wednesday’s break back into the ascending channel invalidated Tuesday’s settlement below the channel. The January WTI blew through the aforementioned line and regained ground above the 10 and 50 day moving averages. Given this scenario, we would look for this spot contract to settle into the sideways trading range set between $55.00 and $58.00. Support is set at $57.02 and $56.84, the 50 and 10-day moving averages. Below this, additional support is set at $55.00. Resistance is set at $58.10 and above that at $59.61.
Fundamental News: The EIA reported that US crude oil stocks increased by 1.4 million barrels in the week ending November 15th even as refineries increased runs. Crude stocks at Cushing, Oklahoma fell by 2.3 million barrels. Refinery runs increased by 519,000 bpd.
Saudi Arabia’s King Salman said the country’s oil policy aims to promote stability in global oil markets, and serves consumers and producers alike. He also stated that the ability of Saudi Aramco to quickly restore oil production capacity after attacks on its facilities in September had proven the country’s ability to meet global demand during any shortage.
Russia’s Energy Minister, Alexander Novak, said Russia plans to produce between 556 and 560 million tons or between 11.17 million bpd and 11.25 million bpd of oil this year. He said Russia will aim to comply with its commitment under the OPEC and non-OPEC output cut agreement in November. He however added that he was not yet ready to announce what his ministry’s stance on a global oil output agreement would be at an upcoming OPEC+ meeting in Austria.
Russia’s President, Vladimir Putin, said Russia and OPEC have “a common goal” of keeping the oil market balanced and predictable. He said Russia will continue its cooperation under the global supply cut deal.
The head of the Russian Direct Investment fund, Kirill Dmitriev, said global oil demand may increase as global trade wars subside, when asked what to expect from a meeting of OPEC and non-OPEC producers scheduled for December.
The head of Russia’s Lukoil, Vagit Alekperov, expects a decision in March on whether OPEC and its allies will extend a deal to cut oil production until the end of 2020.
The head of Libya’s National Oil Corp, Mustafa Sanalla, said the country is pumping 1.25 million bpd of oil and hopes to increase production to 1.5 million bpd next year.
IIR Energy reported that US oil refiners are expected to shut in 921,000 bpd of capacity in the week ending November 22nd, increasing available refining capacity by 339,000 bpd from the previous week. Offline capacity is expected to fall to 700,000 bpd in the week ending November 29th.
Early Market Call – as of 8:35 AM EDT
WTI – Jan $57.35, up 34 cents
RBOB – Dec $1.6548, down 18 points
HO – Dec $1.9050, up 1.33 cents
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