The March WTI (CLH25) trading session settled at 73.32 (+1.00) [+1.38%], a high of 73.68, a low of 72.31. Cash price is at 72.38 (+1.40), while open interest for CLH25 is at 211,466. CLH25 settled above its 5 day (71.63), below its 20 day (73.98), above its 50 day (71.78), above its 100 day (70.55), above its 200 day (71.94) and below its year-to date (73.96) moving averages. The COT report (Futures and Options Summary) as of 2/7/25 showed commercials with a net short position of -274,046 (a decrease in short positions by +33,610 from the previous week) and non-commercials who are net long +244,944 (a decrease in long positions by -36,265 from the previous week).
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The U.S. Energy Information Administration’s latest Short-Term Energy Outlook was released this morning. They raised their 2025 crude oil production forecast slightly, previously from 13.55 million barrels per day to the current 13.59 million b/d forecast. Their 2026 outlook on crude production also increased from 13.62 million barrels per day to 13.73 million b/d. They predict U.S. refinery output decreases by 190,000 barrels per day in 2025 and 180,000 b/d in 2026. They left their 2025 Brent average price forecast of $74 relatively unchanged from last month’s Short-Term Energy Outlook report. In terms of their 2025 global inventory outlook the EIA said, “We still anticipate that global oil inventories will fall by 0.5 million b/d in the first quarter of 2025 (1Q25) because of OPEC+ production cuts, which the organization recently reaffirmed. However, we expect global oil inventories will begin increasing once OPEC+ begins raising production, starting in April 2025. These production increases combined with expectations of relatively weak global oil demand growth will lead to a 0.9 million b/d increase in global oil inventories in the second half of 2025 (2H25) and a 1.0 million b/d increase in 2026”.
Today’s American Petroleum Institute’s weekly report showed U.S. inventories with a +9.043 million barrel build (against a +2.8 mb forecast). The Cushing, Oklahoma hub had a build of +407,000 barrels.
The U.S. Energy Information Administration (EIA) also released an in-depth estimate on China’s 2024 crude oil import and refinery data today. The EIA estimates China imported 11.1 million barrels per day in 2024, down from 11.3 b/d in 2023, nearly a 2% decline, while China’s domestic crude production averaged 4.3 million b/d. Chinese refiners imports from Russia increased for a third consecutive year, averaging 2.2 million b/d, with a 1% increase from 2023. China’s imports from Saudi Arabia, their second-largest crude oil source, decreased for the third consecutive year, averaging 1.6 million b/d, a drop of 9% compared to 2023. The EIA predicts China’s consumption will outpace China’s domestic production, leading to net imports increasing for 2025 and 2026. China’s 10% levying on crude oil from the United States took effect yesterday, as well as 15% tariffs on coal and LNG imports. China’s Shanghai based CSI 300 Index declined -0.46%.
Over the weekend, President Trump demanded that Hamas release all remaining Israeli hostages or face the end of the Israel-Hamas ceasefire agreement by Saturday. Following this Hamas issued a statement on Telegram on Monday announcing it had suspended the next hostage release due to Israel’s delaying of displaced Palestinians into Gaza and blocking supplies from entering the Strip over the last three-week period. Prime Minister Netanyahu responded this morning, saying, “In light of Hamas’ decision to violate the agreement and not release our hostages, last night I ordered the IDF to assemble forces around and within the Gaza Strip. This operation is underway and will be completed soon. The cabinet’s decision is clear: if Hamas does not return our hostages by noon on Saturday, the ceasefire will end, and the IDF will resume intense fighting until Hamas is defeated.” while Israel’s Defense Minister, Israel Katz, condemned this as a “complete violation” of the agreement.
Bloomberg reported that Russia’s crude oil production dipped to 8.962 million barrels per day in January. Russia has been faced with increased logistical problems since the U.S.’s latest sanctions on Russian oil shipments to China and India. Russia’s January production came in 16,000 barrels below its agreed upon OPEC+ quota.
Oil Price reported that imports of Mexico’s crude oil by U.S. refiners decreased by 40% month-over-month, to less than 600,000 barrels per day, as Gulf Coast refiners have begun seeking other sources of similar graded oil. Yesterday, President Trump imposed a 25% tariff on all steel and aluminum imports. In response, the European Union announced it would take “firm and proportionate” countermeasures. Addressing the Senate Banking Committee today Fed Chair Powell said “we do not need to be in a hurry to adjust our policy stance” and that overall the economy is “strong”, but he cautioned that inflation continues to ease above the Fed’s 2% goal. Tomorrow’s January Consumer Price Index, Thursday’s January Producer Price Index and new weekly initial jobless claims reports will offer another read on U.S. inflation. Fed Chair Powell will testify before the House Financial Services panel tomorrow where traders may take further cues on the Fed’s rate cut decisions moving forward. This week much of the Northern Hemisphere will continue to face subfreezing temperatures as the current Arctic Blast system persists. The S&P, Dow Jones and Nasdaq indexes closed mixed after choppy sideways trade while the U.S. Dollar Index closed lower by -0.37%.
Last week’s U.S. Energy Information Administration report for the week ending January 31, showed U.S. commercial crude oil inventories with a build of +8.7 million barrels from the previous week, markedly above its forecast of +2.4 million barrel build, to a total of 423.8 million barrels, inventories are about 5% below their five-year seasonal average. U.S. crude oil imports averaged 6.9 million barrels per day, an increase of 467,000 barrels per day. U.S. crude oil refinery inputs averaged 15.3 million barrels per day, a 159,000 barrels per day increase over the previous week, while refineries operated at 84.5% capacity, 1% higher than the previous week. This was the second consecutive week the EIA has reported commercial crude inventory builds, following last week’s +3.46 million barrel build, and so far the largest weekly build for 2025.
Price Thoughts – Last week’s bearish American inventory builds have had little effect on keeping this latest 3 day rally pressured, fueled by trade tariff uncertainties (which is really a mixed bag bearish and bullish contributor I think), a decline in the dollar, a possible collapse of the Israel-Hamas ceasefire agreement, as well Russian and Iranian oil sanctions. I expect markets to stay choppy until more things are clear and to take short term cues from tomorrows EIA data, which like the API today, I expect to show a large build. We could face a sell off if things break below our 50 and 200 day moving averages at any point this week. A run higher towards $75 has more fuel behind it with today’s close above $73 today, in my opinion. A current range of $70-$75 is beginning to establish. To the downside we have support near $70, further at $67 and change, and below that $65 has been a major support figure over the last year. To the upside there’s resistance near $74.50 and the upper $79.50 region. Longer term I think we are still leaning more into the $65-$80 range rather than the $70-$85 range for 2025 for WTI.
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Jim Rinaudo
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