Recap: Oil futures steadied on Friday during a choppy trading session but fell for the second straight week after countries announced plans to release crude from their strategic stocks. Member nations of the International Energy Agency (IEA) will release 60 million barrels over the next six months, with the United States matching that amount as part of its 180 million barrel release announced in March. WTI for May delivery rose $2.23, or 2.3%, to close at $98.26 a barrel, for a weekly decline of 1.2%. June Brent finished up $2.20, or 2.19%, to settle at $102.78, but down $1.61, or 1.54% on the week. May RBOB added 9.18 cents, or 3.02%, to settle at $3.1316, down 2.19 cents, or 0.69% for the week. May heating oil settled at $3.3176 a gallon, up 4.98 cents, or 1.52%, but down on the week 10.64 cents, or 3.11%.
Technical Analysis: Oil futures appear to be trying to stabilize, as they showed signs of strength on Friday. We expect to see a lot of volatility in this market given the geo-political situation between Russia and Ukraine and Russia and other world powers, and as the new variant of COVID-19 continues to spread. A push back above the 50-day moving average should give this market enough steam to recapture the $100 level, with the possibility of reaching $105. On the downside there is support set at $90 and below that at $89.
Fundamental News: A European Union diplomat said European Union foreign ministers will not formally discuss an oil embargo on Russia at Monday's meeting in Luxembourg. EU foreign policy chief, Josep Borrell, said banning oil imports from Russia would be discussed when ministers meet for the scheduled gathering, after the bloc moved to ban coal in a fifth package of sanctions this week.
Germany’s Chancellor, Olaf Scholz, said Germany might be able to end Russian oil imports this year as the country will be able to substitute oil imports from other countries. In regards to natural gas, he said it would take longer for Europe's biggest economy to wean itself off Russian gas.
Iraq’s state-news agency cited the Oil Ministry as saying that the commitment of the OPEC+ group to agreed output targets has contributed to absorbing an excess of supply in the market. Iraq can ensure oil export volume of more than 3.3 million bpd from its southern terminals. Iraq produced 4.15 million bpd of oil in March, 222,000 bpd short of its OPEC+ production quota.
U.S. energy firms last week added oil and natural gas rigs for a third consecutive week. Baker Hughes reported that the oil and gas rig count increased by 16 to 689 in the week ending April 8th, its highest since March 2020. U.S. oil rigs increased by 13 to 546 this week, their highest since April 2020, while gas rigs increased by three to 141, their highest since October 2019.
IIR Energy reported that U.S. oil refiners are expected to shut in 904,000 bpd of capacity in the week ending April 8th, cutting available refining capacity by 123,000 bpd. Offline capacity is expected to increase to 912,000 bpd in the week ending April 15th but then fall to 889,000 bpd in the week ending April 22nd.
Early Market Call – as of 8:30 AM EDT
WTI – May $93.91, down $4.33
RBOB – May $3.0215, down 11.02 cents
HO – May $3.2501, down 6.53 cents
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