Recap: The oil market on Thursday traded in and out of positive territory, ahead of its expiration at the close. The market traded mostly sideways and posted a high of $76.15 after Ukraine said it would consider any ship heading for Russian Black Sea ports as a potential target. On Wednesday, Russia issued a similar threat, saying it would consider any vessel heading to Ukraine’s Black Sea ports to potentially be carrying military supplies. Warnings from both sides threatened to escalate a dispute over grain shipments and broaden the war to the strategic waterway. However, the crude market sold off over $1.40 from its highs to a low of $74.72 by mid-day. The market later retraced some of its losses and settled in a sideways trading range ahead of the August WTI contract’s expiration at the close. The August WTI contract went off the board up 28 cents at $75.63, while the September WTI settled up 36 cents at $75.65 and the September Brent contract settled up 18 cents at $79.64. The product markets ended the session over 2 cents higher, with the heating oil market settling up 2.26 cents at $2.6444 and the RB market settling up 2.27 cents at $2.7432.
Technical Analysis: The oil market is seen remaining in its recent trading range we previously mentioned from $77.35 to $73.80, basis a continuation chart, as the market continues to weigh supply and demand outlooks and concerns over the economy. The market is seen finding resistance at its high of $76.15, $76.87, $77.11-$77.15 and $77.35. Further upside is seen at $77.93, $79.07 and $79.18. Support is seen at its lows of $74.52, $73.82-$73.78, $73.38, $72.94, $72.63 and $72.21. More distant support is seen at $71.22 and $71.04.
Fundamental News: Two OPEC+ sources said the OPEC+ group’s Joint Ministerial Monitoring Committee panel will hold an online meeting on August 4th, a day later than previously scheduled.
The U.S. Senate backed an amendment to an annual defense bill on Thursday that would prohibit exports to China of oil from the SPR. As voting continued, the tally was 68 to 13 in favor of the measure, beyond the 60 votes needed in the 100-member Senate to add the amendment to the National Defense Authorization Act.
Wood Mackenzie said the current global annual investment of around $500 billion into upstream oil and gas would be sufficient to meet peak oil demand in the 2030s, contrary to widespread belief of under-investment in the sector. It stated that current expenditure could deliver the supply needed to meet demand peaks due to "the development of giant low-cost oil resources, relentless capital discipline and a transformational improvement in investment efficiency". It said it expected oil demand to peak at 108 million bpd in the early 2030s before beginning its long-term decline, with fuel efficiency, electric vehicles, and natural gas substitution taking over eventually.
Kpler ship tracking data is currently showing the U.S. is importing 330,000 b/d of gasoline from Europe so far in July, down from the 450,000 b/d recorded in June. It appears European gasoline exports are being diverted to West Africa, as West Africa appears to be importing some 512,000 b/d from Europe in July versus the 377,000 b/d imported in June.
The EPA reported that the U.S. generated 674 million biodiesel blending credits in June, down from 750 million credits in May. It also reported that the U.S. generated 1.28 billion ethanol blending credits in June, unchanged on the month.
Early Market Call – as of 8:45 AM EDT
WTI – September $76.75, up $1.10
RBOB – August $2.7904, up 4.72 cents
HO – August $2.7328, up 6.84 cents
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