The March WTI (CLH25) trading session settled at 74.62 (-0.82) [-1.09%], a high of 76.00, a low of 74.14. Cash price is at 75.43 (-0.47), while open interest for CLH25 is at 361,898. CLH25 settled below its 5 day (76.14), above its 20 day (73.89), above its 50 day (70.67), above its 100 day (69.83), above its 200 day (72.23) and below its year-to date (75.13) moving averages. The COT report (Futures and Options Summary) as of 1/14/25 showed commercials with a net short position of -332,451 (an increase in short positions by -29,079 from the previous week) and non-commercials who are net long +323,129 (an increase in long positions by +24,899 from the previous week).
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The Energy Information Administration’s weekly report showed a draw of -1.017 million barrels, bringing total stocks to 411.7 million barrels. Crude oil refinery inputs averaged 15.5 million barrels per day, lower than the week prior by -1.125 million barrels per day, while operating at 85.9%, down from the 91.7% from the prior week’s report. Crude oil imports increased by +621,000 barrels per day to a total average of 6.7 million barrels per day. Yesterday the American Petroleum Institute reported an increase of +1 million barrels against most forecasts that predicted a draw, while the Cushing, Oklahoma hub had a build of +500,000 barrels.
Today the World Economic Forum hosted President Trump virtually, where he said that he’s going to ask Saudi Arabia and OPEC to bring oil prices down. The U.S. Senate committees approved Trump’s Energy Secretary nominee Chris Wright, the CEO of Liberty Energy, an onshore oilfield services company based in Denver, as well as his nominee to head the Environmental Protection Agency Lee Zeldin.After taking office on Monday President Trump wasted no time in keeping to his promise to “drill, baby, drill”, declaring a “National Energy Emergency”, and signing several executive orders focused on American energy. He revoked President Biden’s last-minute offshore oil and gas leasing ban that covered 625 million acres (this particular executive order may be subject to litigation), put a freeze on renewable energy projects, and withdrew the U.S. from the Paris Climate Agreement. There was new tariff talk when Trump mentioned he was considering putting on a 10% tariff on Chinese (much lower than the 60% China tariffs he was considering during the election cycle) and EU imports, Trump has repeatedly been saying this week that he plans to impose up to 25% tariffs on goods and products from Mexico and Canada as soon as February 1st, Trump said his administration would “probably” stop purchasing oil from Venezuela, and his administration will consider eliminating electric vehicle subsidies. President Trump has threatened to increase Russian sanctions to “high levels” if Russia chooses to prolong the war in Ukraine writing on his Truth Social platform “ “If we don’t make a ‘deal,’ and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries,”. The major three American indexes closed higher while the U.S. Dollar Index closed lower by -0.04%.
This week the EIA (U.S. Energy Information Administration) released a report forecasting U.S. crude oil production to reach a new all-time high in 2025, averaging 13.5 million barrels per day. Specifically citing Brent oil, they forecast average prices to fall from 2024’s $81 per barrel to $74 per barrel in 2025. The reason for the price reduction the EIA says is “mainly because of growing production in countries outside OPEC+ and demand growth that is less than pre-pandemic average. These factors reduce forecast oil prices because production outpaces consumption, increasing global oil inventories.” and “Significant uncertainty remains in all aspects of oil supply and demand, which will influence oil prices given any differences compared with our forecast. OPEC+ members might change their policies as they face the prospect of ceding further market share to countries outside of the group. U.S. crude oil and other liquids production has been highly sensitive to changes in crude oil prices, and a small difference in prices with our forecast would alter the growth or decline of U.S. production.”
The chairman of China’s Securities Regulatory Commission has introduced new measures to encourage large state-owned mutual funds and insurers to increase their purchases of Chinese A-shares. The initiative also mandates that 30% of newly generated premiums be directed towards investing in stocks, aiming to strengthen Beijing’s financial markets.Reuters, using official data from the Chinese General Administration of Customs, reported that China’s oil purchases from Saudi Arabia were lower by 9%, while imports from Russia increased by 1% setting a record high at 2.17 million barrels per day in 2024. China’s National Bureau of Statistics released its fourth-quarter GDP data last Friday, reporting a growth of +5.4%, compared to forecasts ranging from 5% to 4.9%. However, China’s oil refinery activity declined for the first time in two decades, excluding the pandemic year of 2022. National Bureau of Statistics data also revealed that China’s crude oil reserves were -1.6% lower last year, amounting to approximately -14.13 million fewer barrels per day. The Shanghai based CSI 300 index closed up +0.18%. China’s financial markets will be closed during the country’s weeklong Lunar New Year celebration that begins January 29th.
In the Mideast, Reuters reported that oil giant Saudi Aramco expects global oil demand to increase by +1.3 million barrels per day in 2025. A six-week ceasefire between Israel and Hamas began on Sunday. The Associated Press reported that Yemen’s Houthi rebels said that they will limit their attacks in the Red Sea to only Israeli-affiliated ships now that a ceasefire is in effect between Israel and Hamas. The Houthi’s have disrupted energy shipments for months in the Red Sea and their Supreme Leader Abdul-Malik al-Houthi vowed that attacks on non-Israeli ships would resume if the Gaza-ceasefire breaks at anypoint. The Associated Press reported that the ceasefire between Israel and Lebanon’s Hezbollah will likely extend beyond next week after the agreed upon expiration date passes.
North Dakota’s pipeline authority put out a statement earlier in the week that oil production in the state has decreased between 130,000 to 160,000 barrels per day due to the extreme cold weather and other operational issues.
Price Thoughts – Oil markets were relatively flat and holding above the $75 support area, despite yesterday’s API report, until President Trump’s comments at Davos, interestingly enough this came after reports that the crown prince of Saudi Arabia MBS held a phone call with Trump where they discussed trade and MBS mentioned investing $400 billion in joint U.S. projects. The $75 support was broken through solidly, and we could next see 72.50 be tested below which is my next support area. To the upside there’s resistance near the upper $79.50 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 support near the 200 day MA, $72.50 offers further support and below that $65 is a major support figure.
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Jim Rinaudo
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