The Nov WTI trading session settled at 69.83(+1.66) [+2.44%], had a high of 71.94, a low of 66.33. Cash price is at 68.14(+0.01), while open interest for CLX24 is at 318,997. CLX settled above its 5 day (68.71), its 20 day (68.80), ((Crude broke through to the upside on it’s 5 and 20 day MA)), but below it’s 50 day (71.94), and its 200 day (74.87) moving-averages. The COT report (Futures and Options Summary) as of 9/27 showed commercials with a net short position of -209,236 (a increase in short positions by 10,199 compared to last week) to non-commercials who are net long 191,109 (a increase in long positions by 15,981 compared to last week).
WTI Crude traded as high as +5.24% reaching 71.94 (Dec Brent high was 75.31, +5.03%) during the peak minutes of Iran’s bombing of Israel, prices eased off once the rocket barrage finished and the stock market rebounded slightly from the lows to finish the day. A developing situation obviously, but I predict if we see Israel begin striking Iranian crude facilities or a blockade in the Strait of Hormuz crude could take off from here. In my opinion this is the first time the war-premium has been priced-in and traded in many weeks…. Elsewhere in the Middle East Libya’s oil production resumed this morning and will be fully operational by tomorrow after the two rival governments reached an agreement last week.
The East and Gulf coasts port strike which totals 36 ports, with over 45,000 workers affected, and accounts for ~60% of U.S. shipping traffic started this morning. Analysts from JP Morgan and Goldman Sachs predict it could cause roughly ~3.8-5 billion dollars of economic damage per day. The view of many is, myself included, the longer this drags on the deeper the ramifications it could cause, not just for the U.S. economy but for the global economy as well and add fuel to the already present inflation concerns. The port strike, in my opinion, is bearish for crude oil, as a supply glut buildup is a negative market factor, rather than the U.S. being able to export our product. So far President Biden, when questioned on the topic, said he would not intervene between the disputing parties directly, but urged the United States Maritime Alliance to offer fairer pay to the striking dockworkers. The Department of Energy said yesterday they are buying 6 million barrels of crude for the Strategic Reserve, however inventories remain near two-and-a-half year lows. Thursday’s Jobless numbers and Friday’s Unemployment claims for September should have traders who care about what the Fed will do next attention.
Abroad we have a major OPEC meeting set to be hosted tomorrow, which should provide some answers to the market share story that broke last week regarding Saudi Arabia and their potential abandonment of their $100 price target, as well as a possible further delay of production cuts from OPEC beyond December. In China their stock market, the CSI 300 Index, has jumped over 25% over the last week since China released their economic stimulus package. Their recent stock market climb so far has not reverberated to our Commodity markets as of yet, in my opinion, especially crude.
The National Hurricane Center is tracking 5 storm systems in the Atlantic basin as of this morning, with tropical storm Kirk forecasted to become a hurricane by the end of the week. As of yesterday according to the U.S. Bureau of Safety and Environmental Enforcement, 3% of crude oil production and 1% of natural gas production in the Gulf of Mexico is still offline following Hurricane Helene.
I still see the ceiling waiting to be broken for WTI around ~$72, settling near $70 today helps the technical bulls, but I’ve moved the floor slightly lower to ~$65. It should be noted that the last time we tested sub $64 prices was in May of 2023.
Jim Rinaudo
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Walsh Trading
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