The March WTI (CLH25) trading session settled at 73.77 (+0.60) [+0.82%], a high of 74.31, a low of 72.93. Cash price is at 73.15 (-1.48), while open interest for CLH25 is at 330,550. CLH25 settled below its 5 day (74.37), below its 20 day (74.55), above its 50 day (71.05), above its 100 day (69.99), above its 200 day (72.18) and below its year-to date (74.95) moving averages. The COT report (Futures and Options Summary) as of 1/21/25 showed commercials with a net short position of -339,516 (an increase in short positions by -7,065 from the previous week) and non-commercials who are net long +321,973 (a decrease in long positions by -1,156 from the previous week).
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On Monday, President Trump floated the idea of universal 2.5% tariffs, it was reported by the Financial Times that new Treasury Secretary Scott Bessent favors a 2.5% universal tariff that gradually increases over time, potentially upwards of 20%, citing four unnamed sources familiar with the plan. Speaking today White House press secretary Karoline Leavitt again reiterated that tariffs on China, Canada and Mexico will begin as soon as February 1st. On Sunday, President Trump and Colombia resolved their tariff-migrant dispute after a weekend of back-and-forth threats. Oil markets took notice, as Colombia exports about 38.8% of its crude oil and 6.49% of refined petroleum to the U.S. – totaling ~209,000 barrels of crude per day last year. Colombia is the fourth-largest overseas supplier of crude to the U.S., according to data from Kpler. Energy commodities and energy stock prices were impacted after China’s AI DeepSeek app was shown to perform similarly to American AI models but at a fraction of the cost and energy required to operate.The S&P, Dow Jones and Nasdaq indexes closed higher while the U.S. Dollar Index closed higher by +0.54%.
Today’s American Petroleum Institute weekly report showed a crude inventory build of +2.86 million barrels. The Cushing, Oklahoma hub had a draw of -144,000 thousand barrels.
According to China’s National Bureau of Statistics, China’s manufacturing activity in January fell short of economists’ expectations, with the Manufacturing PMI dropping to 49.1 from 50.1 in December. This was below the Reuters forecast of 50.1 for January and marked the weakest manufacturing data since August 2024. China’s financial markets will be closed for the weeklong Lunar New Year celebration beginning tomorrow.
In the Middle East, two ports in Libya were briefly halted due to protests, the ports export roughly 450,000 barrels per day combined. Libya’s National Oil Company has said protests have halted and operations are back under control. Israel and Lebanon have extended their ceasefire to February 18th. In Gaza, Palestinians have begun returning to northern parts of the strip. There was some shakiness over Israel breaking the terms of the ceasefire agreements in both Lebanon and Gaza over the weekend. President Netanyahu is expected to meet President Trump in Washington next week. The fire that started last Friday, which has since been contained, at the Rumaila oilfield in Iraq continues to disrupt production, affecting about 300,000 barrels per day, according to an Iraqi official speaking to Bloomberg.
Russian newspaper Kommersant reported that Russian crude oil exports dipped by 2.2%, exporting a total of 295.12 million tons in 2024, citing an unnamed source with knowledge of Russia’s export data. Reuters has reported that the U.S. sanctions placed on January 10th on Russia’s oil shadow fleet have driven India and China to seek out non-sanctioned Russian tankers, which has begun to drive premiums and supply disruptions in the Asian market.
Last Friday, Baker Hughes weekly oil and gas rig count showed a decline of 4 rigs, bringing total U.S. rigs to 576. This is the lowest level in 4 years and down 7% year-over-year.
Last week’s Energy Information Administration’s report showed a draw of -1.017 million barrels, bringing total stocks to 411.7 million barrels. Crude oil refinery inputs averaged 15.5 million barrels per day, lower than the week prior by -1.125 million barrels per day, while operating at 85.9%, down from the 91.7% from the prior week’s report. Crude oil imports increased by +621,000 barrels per day to a total average of 6.7 million barrels per day. That was the ninth consecutive weekly decline of U.S. crude oil stocks, with stocks hitting the lowest level since March 2022, and with crude oil stocks about 6% lower than their five-year seasonal average.
The EIA’s weekly report will be released tomorrow and Fed Chair Jerome Powell will speak. The first estimate for the U.S. Q4 GDP will be released Thursday.
Price Thoughts – After setting a new two week low yesterday WTI was able to recover modest gains off fresh Trump tariff threats that sent the dollar higher, the market in my opinion, had been a bit oversold by the end of yesterday’s trading session. We have found technical support from our 200 day moving average. Prices came down near the close after the API showed a weekly build. Tomorrow’s EIA report could dictate where this market ends up by the end of the week depending if forecasts are not in line one way or the other. Yesterday March WTI was trading above $75 pre-open before trade discussion became focused on China’s DeepSeek AI app and the lack of energy required to operate it – combined with the release of surprisingly weak Chinese PMI data. To the upside there’s 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 support near the 200 day MA, $72.50 offers further support and below that $65 is a major support figure.
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Jim Rinaudo
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