As we approach, yet again, another meeting between OPEC and non-OPEC nations this Friday to discuss the progress of their deal to limit output, WTI and Brent crude oil prices continue to hover near five month highs buoyed by optimism of an extension of the pact for at least three months and a further supply cut. However, Iraq’s oil minister was quoted as saying it is premature to decide on what to do beyond March. He was also quoted as saying if there was a need for more output cuts, Iraq will support the consensus decision. Whilst this shilly-shallying continues to hang over the supply picture until the official OPEC decision in November, Iraqis and Saudis have taken the extra steps towards the ultimate goal of rebalancing the global oil supply glut. Iraq has cut their oil supply by 260,000 bpd, exceeding its share of planned reduction by 50,000 bpd. Saudi Arabia’s crude exports fell to 6.693 million bpd in July, down from 6.889 million bpd in June. As these headlines come and go, WTI pricing is searching for the path of least resistance. That path, currently, is to the upside. The $49.26 level can contain selling pressures in the near term if tested. The next major resistance level is around the $52.94 channel-top drawn from the June 21st low of $42.05.
As of 1pm EST, WTI for October delivery is down $0.32 at $49.59, RBOB is down $0.0174 at $1.6512, and HO is down $0.0131 at $1.7665. We continue to keep an eye on potential demand destruction with Hurricane Maria and further fundamentals from tonight’s APIs and tomorrow’s DOEs. Analysts forecast crude stocks rose 2.9 million barrels last week, as fuel inventories drew down, which would continue the trend established in the wake of Hurricane Harvey. Until then, we digest as much non-noise as we can and continue the supply and demand dance.