Oil Price - October 27

[dan_s]

As I have mentioned several times in my weekly podcasts, when WTI moved over $50/bbl the next big resistance level was $52.50. It took awhile to breach that level, but it has. Now the next resistance is $54.00, which is where WTI closed on Friday. If WTI closes a few days above $54.00, then it has rather clear sailing until $60.00, where there is very strong resistance. - Dan
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Investing.com – Crude oil prices settled higher on Friday buoyed by growing expectations that OPEC will agree to extend output cuts beyond March 2018 following bullish comments from Saudi Arabia Crown Prince Mohammed bin Salman.

On the New York Mercantile Exchange WTI crude futures for December delivery rose by 2.4% to settle at $53.90 a barrel (and continued to $54.20 after-hours), while on London's Intercontinental Exchange, Brent added 1.75% to trade at $60.35 a barrel.

Crude oil prices settled at their highest since March as investors received the strongest signal yet that support for prolonged cuts is growing among OPEC members after Saudi Arabia Crown Prince Mohammed bin Salman told Reuters on Thursday the kingdom would support extending output cuts in order to rid the market of excess supplies.

In May, OPEC producers agreed to extend production cuts for a period of nine months until March, but stuck to production cuts of 1.2 million bpd agreed in November last year.

The comments, weeks after Russia President Vladimir Putin said he supported the idea of extending the output-cut agreement through 2018, eased concerns over a potential uptick in global output after Iraq and Peshmerga Kurdish forces agreed to a ceasefire, reducing the possibility of supply disruptions.

In the U.S., meanwhile, investors mulled over data showing the number of oil rigs rose, snapping a three consecutive weeks of declines. Oilfield services firm Baker Hughes said Friday its weekly count of oil rigs operating in the United States rose by 1 to 737.

OPEC increasingly looking at extension through 2018. The WSJ reported that Saudi Arabia and Russia are leaning towards agreeing to extend their production limits through the end of 2018, a move that could be finalized at the upcoming meeting in Vienna on November 30. With those two countries on board, it would be likely that the rest would fall in line. Russian energy minister Alexander Novak warned earlier this week that Russia would boost output by 100,000 bpd next year if the agreement lapsed, while top Russian and Saudi officials also reassured the market about their intentions. “We don’t want to do anything that will shock the market…. and we won’t stop our efforts halfway,” Saudi energy minister Khalid al-Falih told reporters. Separately, al-Falih assured an orderly exit from the deal. “When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don’t have a return to higher inventories,” he told reporters. An extension through the end of next year is rapidly becoming the baseline assumption for the November meeting.

Gulf Coast refineries almost back to normal. Refinery runs along the Gulf Coast averaged 8.8 million barrels per day for the week ending on October 20, or about 324,000 bpd higher than the five-year average, according to the EIA. Refinery runs had been down by 3.2 mb/d, or 34 percent, in the immediate aftermath of Hurricane Harvey. Two months on from the devastating storm, things are nearly back to normal. < Total refinery throughput need to go up another million barrels per day to get to where they were before Harvey.