The December WTI (CLZ24) trading session settled at 67.38 (-4.40) [-6.13%], had a high of 69.00, a low of 66.92. Cash price is at 71.77 (+1.59), while open interest for CLZ24 is at 336,548. CLZ settled below its 5 day (70.49), below its 20 day (71.61), below its 50 day (70.46), below its 100 day (73.32) and below its 200 day (74.33) moving-averages. The COT report (Futures and Options Summary) as of 10/22 showed commercials with a net short position of -229,875 (a decrease in short positions by +16,937 compared to last week) to non-commercials who are net long +203,990 (a decrease in long positions by -9,230 compared to last week).
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Crude prices cratered by over $4 after Israel’s attack on Iranian missile sites avoided crude and nuclear facilities, which was viewed as more restrained than many analysts and traders had anticipated. The limited strike has for now erased the war premium that had been factored into the market, dropping from its peak a few weeks ago and offsetting the roughly 4% gain in the benchmarks from last week. As a result, the market is returning to the lower demand, higher output conditions in place. This was the largest single daily decline for WTI since July of 2022.
Last week The Energy Information Administration (EIA) weekly report showed crude inventories rising by 5.5 million barrels, bringing a total inventory count to 426 million barrels, this was higher than analysts from Reuters forecast of a +270,000 barrel build. U.S. oil production was assessed to be at 13.5 million barrels per day. American imports averaged 6.4 million barrels per day, increasing by 902,000b/d. The American Petroleum Institute (API) data showed U.S. crude stocks building by 1.64 million barrels , above the Reuters forecast of +300,000 barrels. The Department of Energy reported a 5.47 million barrel increase, over a +800,000 forecast. The Cushing hub saw a draw of -346,000 barrels. U.S. crude refinery averaging 16.1 million barrels per day. U.S. inventories remain ~4% lower than the five year seasonal average.
Tomorrow the EIA releases its weekly report on U.S. crude inventories.
Price Thoughts – Settling at $67 and change today may cause the short-term price to steepen here, as my previous price support line was $67 flat (which we traded under at times today) on the downside. Looking at charts here I now see a new support around ~$65.20 (breaking that could push us to $60) and resistance around ~$72 (breaking that could push us to $77). For now OPEC+ is sticking with their planned output increases starting in December, which is significant and I believe not fully priced into futures still. Add to that, if Donald Trump is elected to President next week I believe he’ll fulfill his promise to “Drill baby, drill”, significantly increasing the output capacity for American energy. That could create an interesting market share conflict with the OPEC+ nations, but that’s another story, potentially down the line.
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 high $60’s to $75 range, for long as there’s no black swan events.
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Jim Rinaudo
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