U.S. refining makes a rapid comeback in a supportive development for WTI in particular.
Oil traded positively on Friday with WTI, in particular, the star, pulling itself up off the floor as U.S. refining production restarts in earnest following the passing of Hurricane Harvey. With the storm having passed, it appears that damage to refining capacity is minimal and with only 5.50% now offline from fully 25% a week ago, traders are hopeful that crude backlogs will be cleared, taking the pressure of both WTI and gasoline futures. The Brent/WTI spread has also closed from a six dollar premium to an only four dollars this morning.
WTI spot trades unchanged in Asia at 47.50 having regained its 100-day moving average at 47.30 in a positive technical development. Support is at 46.50 with resistance at 48.70.
Brent spot continues to trade constructively to start the week, opening at its previous longer term resistance at 52.70. It now appears poised to attack resistance at 53.50 which could begin a move to the 55.00 area. Support appears at 52.40 initially.
Both contracts will be vulnerable to North Korean headlines this week, with any signs of escalation from this weekend’s events potentially giving the oil a significant tailwind.