The December WTI (CLZ24) trading session settled at 68.43 (+0.31) [+0.46%], had a high of 68.86, a low of 66.94. Cash price is at 68.13 (+0.06), while open interest for CLZ24 is at 169,247. CLZ settled below 5 day (69.38), below its 20 day (69.87) , below its 50 day (69.89), below its 100 day (72.53) and below its 200 day (74.18) moving averages.
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Today’s The Consumer Price Index (CPI) for October rose to an annual rate of 2.6%, matching analysts’ expectations, up from 2.0% in September which was the lowest since February 2021, according to the Labor Department. Core inflation (which ignores food and energy price) rose at 3.3%, unchanged from the previous month. Core Consumer Prices increased for the 53rd straight month and hit a new record high in October. The headline CPI rose 0.2% month-over-month, hitting its target forecast. Fed Chair Jerome Powel will speak again tomorrow, with the CME Fedwatch Tool currently showing a 82.3% chance for another interest rate cut in December. Retail Sales data will be released on Friday. On Monday President-elect Trump picked Lee Zeldin to lead the Environmental Protection Agency. Zeldin is expected to roll back much of the Biden administration’s regulations in regards to climate and pollution and reducing red-tape when it comes to the shale and coal industries. The USD is currently sitting near four-month highs, the U.S. Dollar Index closed higher by +0.44%
There is yet again another tropical storm forming in the Caribbean with potential to become Hurricane Sara heading towards Florida, the National Hurricane Center said Tuesday. Models show the potential storm moving through the Gulf of Mexico before turning towards Florida. Meteorologists predict the storm is two to seven days away from formation.
In the Middle East it seems yet again that cease fire talks have hit a standstill between Israel, Hamas, Hezbollah and Iran’s other proxy the Houthis. Israel today continued bombing targets in Gaza and Lebanon, including Lebanon’s capital of Beirut, while Israel Defense Forces reported there were projectile launches fired from inside of Lebanon. I think it’s worth mentioning that President-elect Trump has been filling his cabinet with staunchly pro-Israel and “hawkish” on Iran members, such as incoming Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, Homeland Security Secretary Kristi Noem, United Nations Ambassador Elise Stefanik, National Security Adviser Mike Waltz and Mike Huckabee as Trump’s U.S. Ambassador to Israel.
Yesterday OPEC+ cut their global oil demand forecast for this year and for 2025 for the fourth consecutive month. The institution sees oil consumption increasing by 1.8 million barrels per day in 2024, averaging 104 million barrels per day globally, this is 107,000 barrels per day less than the previous forecast. For 2025 OPEC+ predicts that daily global demand will increase by 1.5 million barrels, 103,000 barrels less than the previous forecast. OPEC+ cited the lessening demand out of China, India and Africa as reasons for lowering the forecast. Total crude oil production for OPEC+ averaged 26.53 million barrels per day in October, up by 466,000 barrels compared to September. The report also showed that Russia and Iraq were still currently producing more than the agreed upon OPEC+ quota. There was no update on the production increase that is set to begin in December and gradually increase through next year. OPEC+ is set to hold a major policy meeting on December 1st.
Weekend data out of China showed China’s Consumer-Price Index decreased from the previous month, coming in at 0.3% for October, which was below economists forecast of 0.4%, while China’s Producer-Price Index declined for the 25th straight month and had a 2.9% fall from the previous month. This was the worst consumer price growth for China in four months. Saudi Arabia also lowered their crude delivery forecast for China to 36.5 million barrels for December, the second consecutive month of lower shipments and roughly ~10 million less barrels than were shipped in October. Reuters reported yesterday that U.S. crude exports rebounded in China in the month of October, up to 130,000 barrels per day, citing tracking data from Kpler, exports in August were previously near 4 year lows. On Friday China will put out fresh industrial output numbers for October. The Shanghai CSI 300 Index closed higher by +0.62%.
Price Thoughts – Personally I would be looking to buy any price breaks under $67 at the moment. Settling just above $67 this week could see a further price break towards the next support line around ~$65, which has been a major support line over the last few years. To the upside ~$72 is still the resistance. In the short term I would expect higher volatility from now till the potential Iranian military retaliation against Israel, if there is one.
Now that Donald Trump has been elected President, I believe he’ll fulfill his promise to “Drill baby, drill”, significantly increasing the output capacity for American energy, possibly passing executive orders as soon as day one in office. Keep in mind that the U.S. currently produces 13.5 million barrels of oil per day, a figure that’s nearly 30% higher than it was just four years ago. Over the past 50 years, U.S. energy production has grown at a faster rate than consumption, and since 2019, America has been a net energy exporter. We shall see where that “million barrels per day” number goes after Trump is sworn in. Drastically increasing American energy output could create an interesting market share conflict with the OPEC+ nations, but that’s another story, potentially down the line. Then there’s China, how much stimulus they choose to add to bolster their economy could determine crude prices significantly in the short and long term, I believe, and we’ll have to wait and see the impact Trump’s tariffs have. And then there’s the Middle East situation, which could simmer or explode, and even if the violence ends I believe we’ll see new economic sanctions on Iran’s energy market. 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, it leads me to believe in 2025 crude oil prices will not end up averaging in the $85-$95 range, rather I see crude prices trading in the $65 to middle $70’s range, for long as there’s no black swan events.
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Jim Rinaudo
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