Recap: The crude market moved lower on Wednesday on an increase in U.S. crude stocks and easing concern over Libyan supply. The market posted a high of $74.08 in overnight trading as the market held resistance at its previous high in light of the build in crude stocks of over 2.8 million barrels reported by the API late Tuesday afternoon and news that Libya’s crude oil export activity was operating normally after Libya’s National Oil Corp held talks with protesters demanding a halt in loadings at its oil ports. The crude market settled in sideways trading range ahead of the release of the EIA’s weekly petroleum stocks reports. However, it breached its previous lows as it sold off to a low of $72.33 in afternoon trading in light of the larger than expected build in crude stocks of over 3.4 million barrels. The market later traded sideways following the expected Fed decision to leave interest rates unchanged. The March WTI contract settled down $1.15 at $72.62 and the March Brent contract settled down 91 cents at $76.58. The product markets ended lower, with the heating oil market settling down 39 points at $2.4540 despite the large distillate stocks draw of 4.99 million barrels, and the RB market settled down 1.69 cents at $2.0357.
Technical Analysis: The oil market will likely retrace some of losses and trade mostly sideways as the market awaits further news on the looming tariffs that the Trump administration has threatened to impose on Canada and Mexico starting February 1st. The market will also focus on the OPEC+ meeting scheduled for Saturday after the Trump administration called on OPEC to lower oil prices. The market is seen finding support at $72.33, $72.20-$72.10, $71.31 and $70.43. Meanwhile, resistance is seen at $74.08, $74.31, $75.15, $75.21 and $76.00.
Fundamental News: The EIA reported that U.S. distillates stocks fell by 4.994 million barrels in the week ending January 24th to 123 million barrels. It was the largest decline in a week since March 2022. It reported that U.S. distillate fuel supplied increased to 4.5 million bpd, the highest level since March 2022. Meanwhile, gasoline stocks increased by 2.957 million barrels. Gasoline stocks in the U.S. Gulf Coast region increased to 91.6 million barrels, the highest level since August 2020.
President Donald Trump’s nominee to run the Commerce Department, Howard Lutnick, said that Canada and Mexico can avoid looming U.S. tariffs if they act swiftly to close their borders to fentanyl.
Platts is reporting that crude oil exports from the two eastern Libyan ports of Es Sider and Ras Lanuf resumed late Tuesday afternoon after protests led by the group Oil Crescent Region Movement earlier in the day had disrupted oil operations at the ports. Reportedly preliminary talks on Tuesday between protesters and the Libyan National Oil Corporation have led to an agreement to suspend the protests temporarily for two weeks as protesters await NOC to meet their demands.
IIR Energy said U.S. oil refiners are expected to shut in about 1.25 million bpd of capacity in the week ending January 31st, cutting available refining capacity by 50,000 bpd. Offline capacity is expected to increase to 1.33 million bpd in the week ending February 7th.
Motiva Enterprises completed a shutdown of its 81,000 bpd gasoline-producing fluidic catalytic cracker-3 and its 18,000 bpd alkylation units at its 626,000 bpd Port Arthur, Texas, refinery on Tuesday for planned work. The units are scheduled to be shut until the middle of March for overhauls. A 50,000 bpd cat feed hydrotreater will be shut on a later date for work while the fluidic catalytic cracker unit is shut.
Early Market Call – as of 8:30 AM EDT
WTI – Mar $72.49, down 13 cents
RBOB – Feb $2.0280, down 77 points
HO – Feb $2.4396, down 1.44 cents
