Recap: Oil futures reversed early losses on Thursday, to squeeze out small gains. A resurgence in the coronavirus pushed oil prices back from last week’s gains as most regions apart from Europe experienced a rise in the number of cases. Last week crude oil posted strong gains as the dollar weakened and OPEC and the IEA raised their forecast for global demand growth in 2021. This move was totally erased, as the coronavirus raged across Asia, a very important region in terms of demand. June WTI added 8 cents, or 0.13%, to settle at $61.43 a barrel. June Brent also finished up 8 cents, or 0.12%, closing at $65.40 a barrel. Petroleum products were slightly mixed, with May RBOB declining 0.4%, to $1.98 a gallon, while May heating oil rose 0.4%, to $1.86 a gallon.
Technical Analysis: June WTI came back to test both the 10 and 50-day moving averages but went nowhere. In the long term, this market is still in an uptrend that began back in November and the period of consolidation that it is currently in typically results in a resumption of the previous move. That being said, we would look for this market to try and move higher, but expect to see it struggle. Support remains at $58.85 and below that at $57.25. To the upside, resistance is set at $62.27 and above that at $63.45.
Fundamental News: Libya's National Oil Corporation said the country’s oil production fell to about 1 million bpd from 1.3 million bpd in recent days and could fall further amid budgetary issues. Meanwhile, the U.N. Libya mission said it was concerned by a shutdown of oil output at Hariga port and indications of coming production shutdowns elsewhere.
Separately, one of Libya’s state oil producers said it would have to cut as much as 100,000 bpd of output this week. Sirte Oil Co will be forced to cut production and halt it completely within 72 hours. It said it had to cut production in the past week because of a lack of funding to maintain fields and pipelines. Arabian Gulf Co cut output by 90% or 280,000 bpd.
Iranian crude oil exports remain at elevated levels so far in April compared with last year. Iran’s oil exports have increased since late 2020, despite U.S. sanctions. Petrologistics reported that Iran’s oil exports so far in April fell to 500,000 bpd but were high relative to 2020. It estimated March exports at less than 600,000 bpd. China has been importing more Iranian crude in recent month. A lifting of U.S. sanctions would in theory allow Iran to increase its crude exports back to 2.5 million bpd.
Venezuela's state oil company PDVSA is increasingly using its limited output of medium and light crude for refining, resulting in shortages for blending operations to produce exportable grades.
On Thursday, the Biden administration pledged to cut U.S. greenhouse gas emissions by 50%-52% from 2005 levels by 2030. The goal, unveiled at the start of a two-day climate summit hosted by Democratic President Joe Biden, comes as the United States seeks to reclaim global leadership in the fight against global warming. It also marks an important milestone in Biden's broader plan to decarbonize the U.S. economy entirely by 2050.
Early Market Call – as of 8:20 AM EDT
WTI – June $61.58, up 15 cents
RBOB – May $1.9801, up 54 points
HO – May $1.8649, up 41 points
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