The December WTI (CLZ24) trading session settled at 71.74 (+1.70) [+2.43%], had a high of 72.09, a low of 69.35. Cash price is at 70.56 (+1.40), while open interest for CLZ24 is at 339,683. CLZ settled above its 5 day (70.02), above its 20 day (71.15), above its 50 day (70.82), below its 100 day (73.43) and below its 200 day (74.33) moving-averages. The COT report (Futures and Options Summary) as of 10/15 showed commercials with a net short position of -246,812 (a decrease in short positions by +6,041 compared to last week) to non-commercials who are net long 213,220 (a decrease in long positions by -12,994 compared to last week).
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This morning China’s Commerce Ministry announced that starting in 2025 China would raise its crude oil import quota for private importers by 6%, which is roughly 5.14 million barrels per day. Bull’s were happy to see China lowering their prime lending rates yesterday, providing a fresh batch of monetary stimulus for the country. At the Singapore International Energy Week Saudi Aramco’’s CEO Amin Nasser was quoted yesterday as saying he remains “fairly bullish” on China’s oil imports. Last Friday China disclosed that their GDP came in at 4.6%, slightly above the 4.5% forecast but below the 4.7% pace in the second quarter. As well on Friday the People’s Bank of China said they would add more than $100 billion into China’s stock market. The Shanghai CSI 300 Index rose 0.57% today.
Bloomberg reported that Russia’s crude oil exports have reached a four-month high, according to tanker tracking data. Exports to Asia have climbed to a five-month high. However, Russian crude refiners are operating at their lowest levels since May 2022, based on Bloomberg’s estimates. The yearly three-day meeting of BRICS nations began this morning, with China’s Xi, India’s Modi, Turkey’s Erdogan and Iran’s Pezeshkian joining President Putin in Russia. The focus of the summit will be on how to grow the economic partnership between the BRICS alliance and counterbalance the influence of the United States, the European Union and other “western” aligned nations.
U.S. Secretary of State Antony Blinken arrived in Israel today to revive discussions aimed at ending the Gaza war and the escalating conflict in Lebanon. Over the weekend classified documents leaked from U.S. officials detailing information pertaining to Israel’s retaliatory strike on Iran. According to U.S. officials that have been briefed, Israel is poised to strike Iran before the U.S. Presidential election, which is now only two weeks away, and has stated they do not intend to attack Iranian energy infrastructure or nuclear sites.
In its World Economic Outlook report released this morning, the International Monetary Fund projected global output will grow by 3.2%, a small downgrade of 0.1% from its July estimate. The projection for this year remains unchanged at 3.2%. The IMF also anticipates that global inflation will decrease to 4.3% next year, down from 5.8% in 2024, describing this outlook as “stable yet underwhelming.”
Price Thoughts – The $67 floor has seemed to hold and I now think prices will try to test staying above $72 to the upside, with the next technical resistance around $75.50 I believe . I expect us to stay in this range for the time being. After today’s settlement, WTI has erased about half of last week’s 8% price decrease. In my short-term view, with this Israeli strike looming over the markets, I would expect the market to move ~5% higher off the back of that attack alone, and we could see a push up towards $77-$80. After which I would expect we then sell back to the range (mid $60’s – low $70’s) we’re in now. With the prevailing themes of a stronger dollar, potential trade wars, increasing supply, slowing economies and a lack of global demand front running price sentiment.
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Jim Rinaudo
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