Market Report & Analysis for 9/25/2018 Morning Edition

Morning Market Overview

Crude oil and refined products are pushing strongly higher to start the trading week. This trend is in keeping with the strong gains achieved last week. The entire complex increased for the second week in a row as OPEC and its participating producer allies meet on Sunday to discuss increasing production as Iranian export continue to decline ahead of the early November installation of a new round of sanction on Iran by the US. The buzz in the market had the group considering increasing production yet another 500,000 bpd to offset further declines in Iranian exports. However, the meeting ended with no recommendations to increase supplies.

A technical committee meet on Sunday to analyze the market conditions and develop a recommendation for the Ministerial level members. Part of the argument against raising production is surplus capacity is quickly becoming limited. On the other hand, OPEC is getting pressure from the US for allowing prices to rise. The situation is quickly becoming more complicated.

The next month leading up to the official installation of sanctions is going to be very interesting and likely to result in very choppy price action. Friday afternoon the latest Baker Hughes data hit the media airwaves reporting the number of rigs deployed to the US oil sector decreased by 1 rigs on the week after decreasing during the previous week.

Total rigs deployed to the oil sector are higher by 122 or 16.4 percent year over year. US crude oil production continues in an overall uptrend setting new production records on a weekly basis. Total US crude oil production is about 15.7 percent above where it was for the same week a year ago. This week’s production came in at 11.000 million bpd.