The March WTI (CLH25) trading session settled at 77.39 (-0.46) [-0.59%], a high of 78.55, a low of 77.14. Cash price is at 78.66 (-1.37), while open interest for CLH25 is at 369,800. CLH25 settled below its 5 day (77.54), above its 20 day (72.96), above its 50 day (70.39), above its 100 day (69.73), above its 200 day (72.27) and above 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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President-elect Donald Trump’s nominees for Energy Secretary, Chris Wright, and Treasury Secretary, Scott Bessent, both participated in confirmation hearings this week. During his testimony, Mr. Bessent expressed strong support for raising sanctions on Russian oil producers if requested by the incoming president, stating he is “1000% in favor” of such measures. Mr. Wright, CEO of Liberty Energy, emphasized his commitment to promoting all forms of American energy. He also stated that the U.S. is “quite likely” to refill the Strategic Petroleum Reserve, which is currently well below average levels. According to Bloomberg, Trump’s advisers are reportedly drafting strategies to impose sanctions on Russia, Iran, and Venezuela. Additionally, Bloomberg reported earlier this week that members of Trump’s economic team are considering a gradual approach to increasing tariffs, aiming to raise them by 2%-5% per month to strengthen negotiating leverage without causing inflation spikes. The Wall Street Journal also reported that President Trump plans to sign approximately 100 executive orders following his inauguration.
China’s National Bureau of Statistics released its fourth-quarter GDP data, which significantly exceeded expectations, 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. Despite this, December output saw a 1.4% year-over-year increase. The International Energy Agency (IEA) stated that global oil markets are expected to experience a smaller crude oil surplus than previously anticipated, due to stronger demand and growing supply risks. The IEA also projected China’s oil demand will rise by 220,000 barrels per day in 2025. The Shanghai based CSI 300 index closed higher by 0.31%.
Israel’s Prime Minister Benjamin Netanyahu said Israel had finalized a cease-fire agreement with Hamas, which is expected to begin on Sunday after Israel’s cabinet ratifies the pact today, which is currently being voted on as of this post. It’s being rumored that Houthi attacks against shipping tankers in the Red Sea will cease upon the cease-fire enactment between Hamas and Israel.
This week’s EIA report showed U.S. crude oil inventories falling for the eighth consecutive week. Excluding the Strategic Petroleum Reserve (SPR) commercial crude oil stocks had a draw of -2 million barrels, higher than the -1.1 million barrel forecast, with total stocks standing at 412.7 million barrels, which is about 6% below the five-year seasonal average. The SPR had a build of +500,000 barrels (394.3 million barrels total), while the Cushing, OK hub had a build of +765,000 barrels (20.8 million barrels). The EIA estimated that U.S. crude production decreased by -82,000 barrels from the previous week’s report, to a total of 13.48 million barrels per day. Crude imports decreased by -304,000 barrels per day, to a total of 6.1 million barrels per day. U.S. crude exports increased by +1 million barrels a day to a total of 4.1 million barrels per day. Refineries operated at 91.7% capacity, -1.6% less than the week prior. Refinery inputs decreased by -255,000 barrels per day, while inputs averaged 16.6 million barrels per day. The American Petroleum Institute report showed a -2.6 million barrel draw, with a +573,000 barrel build at the Cushing, OK hub.The Energy Information Administration (EIA) released their Short-Term Energy Outlook report this week. The EIA raised their 2025 production estimate for the U.S. to 13.55 million barrels per day, up from their previous estimate of 13.52 million barrels per day. For 2024 the EIA lowered its forecast for U.S. production to 13.21 million barrels per day, down from the previous 13.24 barrels per day forecast. The EIA said global oil demand hit a record 104.65 million barrels per day last month while global oil supplied was 103.25 million barrels per day. In OPEC+’s first monthly oil report the cartel kept their global oil demand forecast unchanged at 1.45 million barrels per day, while lowering their forecast for 2024 from 1.61 million barrels per day to 1.5 million barrels per day. For 2026 OPEC+ sees global oil demand growth of +1.43 million barrels per day.
U.S. Industrial Production for December was stronger than expected, coming in at +0.9% against a forecast of +0.3%. The U.S. Labor Department’s latest Producer Price Index figures showed an +0.2% increase in December from November, down from the +0.4% figure in November, year-over-year producer prices rose +3.3%. There was an increase in wholesale energy prices by +3.5% from November-to-December, headed by a +9.7% in gasoline prices. The Bureau of Labor Statistics released the December Consumer Price Index showing core inflation grew +3.2%, lower than the +3.3% economists surveyed by Dow Jones predicted, while headline inflation grew +2.9%, matching predictions. The U.S. Dollar Index closed higher by +0.41%
Price Thoughts – Crude markets closed higher for its fourth consecutive week, fueled off S/D imbalances and risks, short-covering, as well as the below average temperatures in the Northern Hemisphere, despite the choppy trade over the last two days — in my opinion. The last time March WTI traded near $80 was on April 12th 2024 when the contract touched $79.48. Fresh COT data showed crude oil longs in WTI and Brent contracts hitting an eight-month high. I think we have short term support at $75, with short term 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, settling below $77 next week could create a downstream that sends us below $75, near the 200 day MA, 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 are holding back 5.86 million barrels per day (~5.7% of global demand). I expect prices to take cues from another important week of API and EIA S/D information and the 100 executive orders Trump plans on signing in his first week in office.
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Jim Rinaudo
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