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Oil climbs to highest level since October 2018 ahead of OPEC+ meeting

  
Analysis, Crude

WTI up by 2.8% to $68.20 currently

WTI D1 01-06

Oil is searching for a break to the topside as price now extends to its highest since October 2018 with buyers pushing price action above $68 at the moment.

The bullish run in oil so far this year is staying the course and there is still little to suggest the momentum from being derailed – even from a technical perspective.
It remains to be seen if buyers can keep with the break above $68 before the day ends with OPEC+ still a key risk factor to the equation.
The bloc is expected to stick with the status quo for now but there might be hints on what they may do later in the year if demand conditions continue to pick up globally.
The restart of production may temper with sentiment a little but I still don’t imagine that to totally outweigh the bullish sentiment on the reopening and the reflation narrative.
Even if gains may be reined in briefly during the short-term, there is still much to be bullish about oil in the long-term; at least for the time being.

Oil stays perky ahead of OPEC+ meeting tomorrow

  
Analysis, Crude

WTI up 1% just above $67 currently

WTI D1 31-05
Oil is trading close to its best levels for the year and from a technical perspective, may be set for a surge of gains if it can hold a daily close above $67 with a firm break above the $68 level preferable for buyers to extend the upside momentum.
Iran remains a wildcard but the OPEC+ meeting tomorrow will be among the focal points in trading this week.
On the latter, I don’t see OPEC+ upsetting the status quo but the market will be looking for hints on any step up in production later in the year. That is one risk to watch during the week besides the technical considerations and risk sentiment.
In the bigger picture though, there will be growing expectations – certainly not misplaced – that OPEC+ will eventually flood the market with oil again. That said, demand conditions are also expected to be strong enough to take all that in by then.
As such, there is still a strong bullish consideration for oil as long as the reflation narrative keeps up over the next year or so.

OPEC+ likely to stick to the existing plan – report

  
Analysis, Crude

Sources cited by Reuters

Sources cited by Reuters
Oil has been on the move this hour and is up $0.35 to $66.55. It’s flirted with this area a bunch of times in the past few months but at this level it would be marginally the best closing level since 2018.
I brought the Iran news a short time ago and now there’s this. I don’t think this is market moving because the plan is baked in. OPEC+ meets on Tuesday and the plan is to keep adding oil through July.
The Reuters report mentions Iran’s oil as an x-factor. OPEC has just under 6 mbpd in spare capacity and it’s coming back to the market, the question is how patient they will be.

Iran is readying a hike in its oil exports to “maximum capacity” within months

  
Analysis, Crude

EnergyIntel website have the report. Citing two unnamed sources for the news.

The background being positive talks in Vienna with the US which could remove sanctions.
expectation of a deal next week
  • sanctions to be lifted then in 2 to 3 months time
  • Iran ready to boost exports
  • ready to pump & export at maximum capacity, regardless of this does to price
  • as much as 2 million barrels per day of Iranian crude returning to the market
Those above bullet points are pretty much what the oil market has expected anyway. Oil has dropped in past days on this.
EnergyIntel website have the report. Citing two unnamed sources for the news.

Oil falls further after Iran says texts are mostly drafted for return to nuclear deal

  
Analysis, Crude

A deal is in the bag

WTI daily
There are a few small hurdles to get a deal done but it looks like it’s coming. Iran’s lead negotiator Abbas Araghuchi said the draft texts for a return to the deal are mostly done.
WTI is at $62.03 on the statement, down 5.3% on the day.
The question has always been ‘how much is priced in’ for a deal. I tend to think that with all the recent statements, it should have been anticipated. That said, it’s tough to do in the physical market and depends how Iran returns to the market.
For the longer-term, I like buying a dip on a deal announcement. That would take a big risk out of the market and OPEC+ has proven that they’re in it to win it. So if Iran’s oil makes the market less balanced, OPEC will wait longer to bring back production. And eventually the pandemic ends and demand surges.
Update: We have more confirmation that deal is almost done.
  • EU’s Mora says confident Iran nuclear deal will be reached
  • Iran monitoring agreement will be extended
  • Diplomats to reconvene next week in Vienna

US weekly oil inventories +1320K vs +2000K expected

  
Analysis, Crude

Weekly EIA US petroleum inventories

US weekly oil inventories
  • Prior was -426K
  • Gasoline -1963K vs -700K exp
  • Distillates -2324K vs -1167K exp
  • Refinery utilization +0.2% vs -1.0% exp
  • Cushing -142K vs -421K prior
API data from late yesterday:
  • Crude +620K
  • Cushing -53K
  • Gasoline -2837K
  • Distillates -2581K
Oil is near the lows of the month with WTI down $2.60 to $62.91. There’s been little reaction to this report.

Russian Envoy: I did not say there was a breakthrough in Iran nuclear talks

  
Analysis, Crude

Hold on a minute

The Russian envoy is now saying that he did not say there was a breakthrough in Iranian nuclear talks.  However, there was significant progress, but unresolved issues still remain.
Crude oil
The price of crude oil is trading back above the $65 level at $65.15. That still down one dollar and $0.15 or -1.72%.   It also takes price back above the 200 and 100 hour MAs at $65.16 and $65.30 respectively.

Crude oil trades to a new session high at looks toward swing highs for May

  
Analysis, Crude

Low price extended gains with crude oil contract up $1 on the day

The price of crude oil is trading to a new session high and in the process is now up one dollar on the day or 1.53% to $66.36. The  high price just tick to $66.38.

Low price extended gains with crude oil contract up $1 on the day

Looking at the hourly chart, the price is running away from its sideways 100 and 200 hour moving averages at $65.01 and $65.13 respectively (blue and green lines). The next targets come in at the high from last week at $66.60 and the high from May 5 at $66.73.

IEA says that oil demand recovery will outpace growth in supply

  
Analysis, Crude

That despite cutting its demand forecast for India

Oil
  • Demand recovery forecast assumes COVID-19 situation in India improves
  • Extra supply is due from Canada, Brazil
  • Under current OPEC+ scenario, supplies will not match expected demand recovery
  • OPEC+ has pumped far below the call on its crude
  • However, demand recovery is fragile amid India’s COVID-19 situation

That fits with conventional market wisdom for the most part but just continue to keep an eye on India as they are a major wildcard considering the virus situation. If that persists for many more months and well into 2H 2021, it could alter the landscape.

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