Recap: After reaching their highest level in 3 weeks, oil prices bounced around on both sides of unchanged, finishing slightly higher on the week. Trading was volatile on what was the expiration of the November WTI contract, which went off the board at $51.47 a barrel, up 18 cents, or 0.35%. Brent for December delivery finished the week at $57.75 a barrel, up 52 cents, or 0.91%.
For the first time since May of 2016, a “golden cross” of the 50 and 200-day moving averages has occurred in WTI. A “golden cross” is when a shorter term moving average crosses above a longer term moving average. This is considered a bullish breakout. The 10-day moving average, currently set at $51.31, will provide a level of support. Resistance is set at $52.19 and $52.40.
December heating oil settled at its highest level in 4-weeks, despite warmer than normal temperatures in most of the U.S. The 10-day moving average, currently set at $1.7855 will provide the first level of support. Below this additional support is provided by the downward trend line set at $1.7518. Resistance is set at $1.8238, and $1.8300.
Fundamental News: On Friday, Iraqi forces took control of the last district in the oil-rich province of Kirkuk still in the hands of Kurdish Peshmerga fighters following a three hour battle. The government advance has transformed the balance of power in northern Iraq and is likely to scuttle the independence aspirations of the Kurds, who voted on September 25th to secede from Iraq and take the oil fields of Kirkuk with them. Iraqi forces are seeking to reestablish Baghdad’s authority over territory which the Kurdish forces occupied outside the official boundaries of the autonomous region.
Oil exports from Iraq’s Kurdistan towards the Turkish Mediterranean port of Ceyhan were flowing at reduced rates on Friday of 216,000 bpd compared to the usual flows of 600,000 bpd. Flows have been reduced since the start of the week after Iraqi military forces took oilfields near Kirkuk from Kurdish Peshmerga forces.
Chevron is temporarily halting oil exploration in Iraq’s Kurdish region amid rising tension between the central government and local authorities.
Baker Hughes reported that the US oil rig count fell for a third consecutive week, extending a two-month drilling decline. It reported that the oil rig count fell by 7 to 736 in the week ending October 20th, the lowest level since June.
Mexico’s Deputy Energy Secretary, Aldo Flores, said the country does not plan to attend the OPEC and non-OPEC meeting on November 30th. He also stated that the country was close to joining the IEA.
Wood Mackenzie said Libya’s crude oil output is close to its near term limits. It said that with production at 850,000 bpd, output growth will be gradual and capped at 1.25 million bpd.
Oil Movements reported that OPEC shipments are expected to fall by 80,000 bpd to 23.7 million bpd in the four week period ending November 4th, compared with the four week period to October 7th. Middle East shipments, including from non-OPEC countries Oman and Yemen, are expected to fall by 310,000 bpd to 16.8 million bpd.
IIR reported that US oil refiners are expected to shut in 1.403 million bpd of capacity in the week ending October 20th, increasing available refining capacity by 657,000 bpd from the previous week. IIR expects offline capacity to fall to 1.343 million bpd in the week ending October 27th.
Early Market Call - as of 9:00 AM EDT
WTI - Dec $52.06, up 22 cents
RBOB - Nov $1.6811, up 38 points
HO -Nov $1.8056, unchanged
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