Energy Price Update for November

November 2, 2018

Crude oil and refined products are trading mixed on Friday as market traders weigh news that eight Iranian crude buyers will receive waivers from the US and an increase in Russian oil production, against continued losses in the US dollar and broad-based gains in global equities, amid hopes for an easing of US-China trade tensions following a talk between the two nations’ leaders via telephone yesterday, but despite unsupportive economic data releases for Europe.

According to Bloomberg, a US official said that the US has decided to grant waivers to eight countries, allowing them to continue their purchases of Iranian crude, even after US sanctions on Iran go into effect on Sunday, November 4th, but without details on the amount of oil permitted. Bloomberg also reported that a list of these countries, which includes South Korea, Japan, and India, is expected to be officially released on Monday.

Also, data from the Russian Energy Ministry confirmed that Russian oil production rose to a 30-year high of 11.41mb/d last month, up from 11.36mb/d in September and about 0.46mb/d above the 10.95mb/d level that Russia initially pledged to maintain in December 2016 to comply with the OPEC output cut agreement.

Economic data released overnight for Europe were mixed but unsupportive on balance. Manufacturing PMI indexes for France, Germany, and the Eurozone fell in October, with the reading for the Eurozone coming in slightly under Econoday’s forecast. However, the UK construction sector saw higher than predicted growth last month, with the index rising to 53.2. Market participants looked ahead to the October Employment Situation report and the September international trade balance for the US, as well as the September merchandise trade balance for Canada for further direction.

Crude complex futures fell yesterday with WTI crude dropping $1.62 for a $63.69 a barrel settlement, and Brent crude tumbled $2.15 and settled at $72.89, heating oil closed 5.06 cents weaker at $2.2008 per gallon and gasoline fell 3.49 cents to settle at $1.7165.  Natural gas shed 2.4 cents to settle at $3.237 per MMBTU.

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