Recap: The oil market continued to trend higher on Thursday, with the expiring March WTI contract ending the session up 0.44% amid the continuing concerns over supply disruptions. The market traded lower in overnight trading in light of the API report late Wednesday showing a build in crude stocks of over 3.3 million barrels. It posted a low of $71.85 before it bounced off that level and retraced some of its losses ahead of the release of the EIA’s weekly petroleum report on Thursday afternoon. The market failed to test its previous low as it remained buoyed by the supply concerns, with an arctic blast in the U.S. freezing wells and cutting output and the news earlier this week of Caspian Pipeline Consortium oil flows falling by 30%-40% after a Ukrainian drone attack on a pumping station. The market rallied to a high of $73.25 following the release of the EIA report, which showed a larger than expected build in crude stocks of 4.6 million barrels, while distillate and gasoline stocks fell on the week. The expiring March contract later erased some of its gains ahead of the close and went off the board up 32 cents at $72.57. The April WTI contract settled up 38 cents at $72.48 and the April Brent contract settled up 44 cents at $76.48. Meanwhile, the heating oil market settled up 4.69 cents at $2.5034 and the RB market settled unchanged at $2.0865.
Technical Analysis: The crude market on Friday is seen trending sideways as the market erases some of its gains on easing supply concerns. The oil output that was shut due to freezing temperatures in North Dakota is expected to begin its resumption as temperatures moderate. The market is also seen trending sideways as it awaits further developments on the Ukraine-Russia peace talks. The oil market, basis the April contract, is seen finding support at $71.73, $71.69, $70.12-$70.10, $70.00 and $69.75. Meanwhile, resistance is seen at $73.14, $73.33, $74.00, $74.06, $74.32, $74.51 and $74.90.
Fundamental News: The EIA reported that crude oil stocks in the week ending February 14th built by over 4.6 million barrels to 432.5 million barrels. It reported there was no crude oil addition to the SPR in the latest week for the first time since December 2023. The EIA also reported that distillate stocks fell by 2.051 million barrels on the week to 116.6 million barrels. The U.S. four-week average product supplied of distillate fuel oil increased by 64,000 bpd to 4.289 million bpd, the highest level since March 2022.
Justin Kringstad, director of the North Dakota Pipeline Authority, said North Dakota’s oil production was estimated to be down between 130,000 and 160,000 bpd as of Thursday morning due to the recent extreme cold and related operational challenges. Associated wellhead natural gas production was estimated to be down 0.37-0.45 bcfd. The director said that with warmer weather moving into the region on Thursday, he expects it take up to a week for most of the curtailed production to resume.
U.S. President Donald Trump’s Ukraine and Russia envoy Keith Kellogg met Ukraine’s President Volodymyr Zelenskiy in Kyiv on Thursday. Ukraine’s President Zelenskiy had earlier struck a conciliatory tone after accusing U.S. President Trump of repeating Russian disinformation in response to the U.S. president’s accusation that Ukraine had started the war with Russia. President Trump referred to Ukraine’s President as a “dictator” who should act fast or lose Ukraine.
NatGasWeather reported that an Arctic blast will continue to impact much of the eastern half of the U.S. through Saturday, with highs of -0s to 40s and lows of -20s-30s, with very strong heating demand. The warmer exception will be the West and far southern and western U.S., with highs of 50s-70s. Temperatures will begin to moderate over much of the U.S. late this weekend into early next week, with highs of 40s-70s.
Early Market Call – as of 8:35AM EDT
WTI – Apr $72.05, down 42 cents
RBOB – Mar $2.0764, down 1.01 cents
HO – Mar $2.4773, down 2.55 cents
