The March WTI (CLH25) trading session settled at 77.30 (+1.55) [+2.05%], a high of 77.64, a low of 75.67. Cash price is at 76.57 (+2.64), while open interest for CLH25 is at 348,624. CLH25 settled above its 5 day (74.47), above its 20 day (71.38), above its 50 day (69.73), above its 100 day (69.48), above its 200 day (72.25) and above its year-to date (73.87) 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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On Friday, the U.S. Treasury imposed new sanctions on Russian oil giants Gazprom and Surgutneftegaz, as well as 183 oil tankers, often referred to as Russia’s ‘Shadow Fleet.’ In 2024, Gazprom and Surgutneftegaz were responsible for shipping around 970,000 barrels per day, primarily to refineries in India and China. Citigroup Inc. estimates that up to 30% of the shadow fleet could be impacted by these sanctions, while Goldman Sachs projects that these tankers transport about 25% of Russia’s oil exports. The announcement during Friday’s trading session pushed oil prices to four-month highs and we saw continued upward momentum off that today in my opinion.
Chinese government data released this morning revealed that the country’s exports reached a record high in 2024, growing by 7.1% to total $3.58 trillion. Additionally, China’s trade surplus reached a new all-time high of $990 billion. Saudi Aramco is set to sell roughly 43.5 million barrels to China next month, down from the 46 million barrels being delivered this month. On Friday China will release fourth-quarter and full-year GDP, in addition to industrial production data. The Shanghai based CSI 300 index closed lower by -0.27%.
Last week’s December jobs report beat estimates, showing a gain of +256,000 jobs vs a forecast of +155,000 jobs. Unemployment also pulled back from 4.2% to 4.1%. The Fed meets next on Jan 28-29th, currently CME’s Fedwatch Tool projects a 97% chance that there will not be a rate cut at this meeting. Goldman Sachs released a new Dollar forecast, predicting the currency to rise 5% in 2025. The U.S. Dollar Index closed lower by -0.04%.
Last week’s EIA report showed U.S. refineries averaging 16.9 million barrels per day, operating at 93.3% capacity. U.S commercial oil inventories fell by 1 million barrels, total inventories stand at 414.6 million barrels, which is about 6% below the seasonal average. U.S. oil imports averaged 6.4 million barrels per day, a decrease of 497,000 barrels from the previous week’s report. API data showed crude oil inventories falling by 4.002 million barrels, with a 3.115 million barrel draw from the Cushing hub.
Tomorrow we get U.S. Producer Price Index and weekly API data, on Wednesday U.S. Consumer Price Index and EIA data. OPEC+’s first monthly report of the year is expected to be released this week.
Price Thoughts – The third session in a row of gains for oil. WTI and Brent crude have risen about 6% since Jan 8th, with Brent crossing into $80 territory and WTI hitting four-month highs. I think we have short term support at $75, with short term resistance near the upper $78 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 resistance of its own. To the downside below $75 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 up trend into next month, as they currently hold 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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