The Nov WTI trading session settled at 70.10 (+0.27) [+0.39%], had a high of 72.49, a low of 69.87. Cash price is at 689.81 (+1.67), while open interest for CLX24 is at 305,581. CLX settled above its 5 day (68.96), its 20 day (68.92), but below its 50 day (71.86), and its 200 day (74.87) moving-averages. The COT report (Futures and Options Summary) as of 9/27 showed commercials with a net short position of -209,236 (a increase in short positions by 10,199 compared to last week) to non-commercials who are net long 191,109 (a increase in long positions by 15,981 compared to last week).
Crude oil prices surged this morning, in my opinion likely driven by short covering and speculation about potential Israeli strikes on Iranian energy facilities. However, the market eventually retraced around the $72.50 technical resistance level before settling at 70.10. It’s just my opinion, and I’m speculating here, but wouldn’t it make some sense and save some face for Israel to act out their retaliation after Rosh Hashanah (which begins tonight and ends Friday night) and strikeback on the anniversary of the October 7th terrorist attack?
Nothing much headline worthy seemed to come from today’s OPEC+ meeting. Saudi Arabia did warn Iraq and other countries to not violate their output quota, warning the conglomerate that prices could fall to $50 a barrel if violations continue to occur. The organization still plans on sticking with the December timetable for an increase of 180,000bpd output, for now, personally I’m skeptical that OPEC+ will stick to this plan, with prices being where they are. In China their stock market, the CSI 300 Index, has jumped over 25% over the last week since China released their economic stimulus package, it climbed another 8% today. Their recent stock market rise so far has not reverberated to our Commodity markets as of yet, in my opinion, especially crude.
The EIA today showed commercial crude inventories increasing by 3.9mb from the previous week, historically we are still around 4% below the 5 year average. Yesterday the API showed a smaller than expected decline in U.S. stocks, with inventories decreasing ~1.6mb, compared to the drawdown of 4.3mb from the previous weekly report. Tomorrow’s Jobless numbers and Friday’s Unemployment claims for September should have traders who care about what the Fed will do next attention.
I still see the ceiling waiting to be broken for WTI around ~$72, settling above $70 today helps the technical bulls, but I’ve moved the floor slightly lower to ~$65, partly because of the net-short to net-long positioning and the lower global demand conditions. It should be noted that the last time we tested sub $64 prices was in May of 2023.
Jim Rinaudo
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Walsh Trading
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