The March WTI (CLH25) trading session settled at 78.71 (+2.34) [+3.06%], a high of 79.39, a low of 76.16. Cash price is at 77.51 (-1.36), while open interest for CLH25 is at 360,370. CLH25 settled above its 5 day (76.36), above its 20 day (72.15), above its 50 day (70.11), above its 100 day (69.64), above its 200 day (72.27) and above its year-to date (74.67) moving averages. The COT report (Futures and Options Summary) as of 1/7/25 showed commercials with a net short position of -303,372 (an increase in short positions by -28,304 from the previous week) and non-commercials who are net long +298,230 (an increase in long positions by +24,900 from the previous week).
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Today’s EIA weekly report showed U.S. crude oil inventories falling for the eighth consecutive week. Excluding the Strategic Petroleum Reserve (SPR) commercial crude oil stocks had a draw of -2 million barrels, higher than the -1.1 million barrel forecast, with total stocks standing at 412.7 million barrels, which is about 6% below the five-year seasonal average. The SPR had a build of +500,000 barrels (394.3 million barrels total), while the Cushing, OK hub had a build of +765,000 barrels (20.8 million barrels). The EIA estimated that U.S. crude production decreased by -82,000 barrels from the previous week’s report, to a total of 13.48 million barrels per day. Crude imports decreased by -304,000 barrels per day, to a total of 6.1 million barrels per day. U.S. crude exports increased by +1 million barrels a day to a total of 4.1 million barrels per day. Refineries operated at 91.7% capacity, -1.6% less than the week prior. Refinery inputs decreased by -255,000 barrels per day, while inputs averaged 16.6 million barrels per day. Yesterday’s American Petroleum Institute report showed a -2.6 million barrel draw, with a +573,000 barrel build at the Cushing, OK hub.
In OPEC+’s first monthly oil report the cartel kept their global oil demand forecast unchanged at 1.45 million barrels per day, while lowering their forecast for 2024 from 1.61 million barrels per day to 1.5 million barrels per day. For 2026 OPEC+ sees global oil demand growth of +1.43 million barrels per day.
The Energy Information Administration (EIA) released their Short-Term Energy Outlook report this week. The EIA raised their 2025 production estimate for the U.S. to 13.55 million barrels per day, up from their previous estimate of 13.52 million barrels per day. For 2024 the EIA lowered its forecast for U.S. production to 13.21 million barrels per day, down from the previous 13.24 barrels per day forecast. The EIA said global oil demand hit a record 104.65 million barrels per day last month while global oil supplied was 103.25 million barrels per day.
The International Energy Agency (IEA) said they expect global oil markets to face a smaller crude oil surplus than previously forecast amid stronger demand and increasing supply risks. The IEA forecast China’s oil demand to increase by +220,000 barrels per day in 2025. China’s National Bureau of Statistics will release the country’s 2024 GDP data on Friday. The Shanghai based CSI 300 index closed lower by -0.64%.
President Biden announced that a ceasefire deal was agreed upon between Israel and Hamas. At the time of this post, Israel’s Prime Minister Benjamin Netanyahu has not confirmed the deal. U.S. and Qatari officials said the deal would begin on Sunday.
Yesterday Bloomberg put out a story saying, “Members of President-elect Donald Trump’s incoming economic team are discussing slowly ramping up tariffs month by month, a gradual approach aimed at boosting negotiating leverage while helping avoid a spike in inflation, according to people familiar with the matter”. It’s being speculated that the Trump team will increase tariffs by 2%-5% per month, per Bloomberg sources. The U.S. Labor Department’s latest Producer Price Index figures showed an +0.2% increase in December from November, down from the +0.4% figure in November, year-over-year producer prices rose +3.3%. There was an increase in wholesale energy prices by +3.5% from November-to-December, headed by a +9.7% in gasoline prices. The Bureau of Labor Statistics released the December Consumer Price Index showing core inflation grew +3.2%, lower than the +3.3% economists surveyed by Dow Jones predicted, while headline inflation grew +2.9%, matching predictions. The U.S. Dollar Index closed lower by -0.14%.
Price Thoughts – I think besides the new bullish reports we got today we saw some short covering come in as well as some rolling from the Feb to Jan contracts. The last time March WTI traded near $80 was on April 12th 2024 when the contract touched $79.48. Fresh COT data showed crude oil longs in WTI and Brent contracts hitting an eight-month high. I think we have short term support at $75, with short term resistance near the upper $78.50 region, beyond that there’s a chance, in my opinion, we could make a run towards the upper resistance point of ~$85, but a round figure like $80 could be enough of mental resistance of its own. To the downside below $75 near the 200 day MA and $72.50 offers support and below that $65 is a major support figure. I wonder if OPEC+ will usher in their delayed production sooner than April if WTI and Brent prices continue on the uptrend into next month, as they currently are holding back 5.86 million barrels per day (~5.7% of global demand). I expect prices to take cues from an important week of API and EIA S/D information.
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Jim Rinaudo
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