The April WTI (CLJ25) trading session settled at 66.03 (-1.01) [-1.51%], a high of 67.60, a low of 65.80. Cash price is at 67.04 (+0.67), while open interest for CLJ25 is at 219,284. CLJ25 settled below its 5 day (66.79), below its 20 day (69.78), below its 50 day (71.64), below its 100 day (70.10), below its 200 day (71.13) and below its year-to date (71.79) moving averages. The COT report (Futures and Options Summary) as of 3/4/25 showed commercials with a net short position of -209,828 (a decrease in short positions by +13,731 from the previous week) and non-commercials who are net long +184,222 (a decrease in long positions by -12,701 from the previous week)
June’25 Brent Crude contract settled at 68.79 (-1.09) [-1.56%]
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Mark Carney is set to replace Justin Trudeau as Canada’s next Prime Minister, possibly as soon as this week. He said his administration would keep on U.S. tariffs “until the Americans show us respect”. In the past Carney has voiced his support to expand Canada’s energy output, with both “green” policies and traditional oil and natural gas projects. Meanwhile, Ontario’s Premier also threatened to cut off energy supplies if the U.S. continued to implement tariffs on Canadian goods.
Speaking to the Financial Times, U.S. Energy Secretary Wright stated that it would take $20 billion over several years to refill the Strategic Petroleum Reserve (SPR) to full capacity. The SPR is currently at its lowest level in decades. Wright said he also believes that U.S. shale producers could remain profitable even if oil prices were to drop to $50 per barrel.
Mexico’s President Sheinbaum stated that she does not expect President Trump to impose reciprocal tariffs on Mexico’s exports next month. According to Bloomberg, U.S. refiners have started reducing their intake of Mexican crude oil. Delivery data shows that Gulf Coast refiners ordered 410,000 barrels per day of Mexican oil in February, marking a 17% decline in nominations.
Saudi Arabia will host Ukrainian and U.S. officials this week to discuss the proposed mineral deal and ways to end the Russia-Ukraine conflict. Last week, President Trump stated, “I am strongly considering large-scale banking sanctions, sanctions, and tariffs on Russia until a ceasefire and final peace settlement are reached.” Later, Reuters reported that the Trump Administration is exploring options to reduce sanctions on Russia’s energy sector in an effort to facilitate a peace deal between Ukraine and Russia, according to two unnamed sources.
A new refinery in China, Shandong Yulong Petrochemical, is set to begin partial operations by the end of March, potentially boosting Chinese crude imports. The refinery is expected to process 200,000 barrels per day, according to Reuters sources with knowledge of the refiner’s operation. The Washington Post reported that China and the Trump Administration have discussed a potential summit between the two nations in June. On Sunday China’s National Bureau of Statistics said China’s February Consumer Price Index declined by -0.07% year-over-year, a flip from January’s +0.5% increase. This was the first decline in CPI for the nation in 13 months. China’s outbound shipments grew +2.3% yoy, but came in below market forecasts. China’s annual National People’s Congress passed last week with no new stimulus announcements. China’s Shanghai 300 Index declined -0.39% today.
Last week OPEC officials confirmed that their April oil output increase would go on as scheduled, although they added that the return could be flexible, saying “Accordingly, this gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability.” Russia’s Deputy Prime Minister Novak said today that OPEC could alter their 2025 production increases, quote “If there is an imbalance in the market, we can always play in the other direction” Currently OPEC is holding back 2.2 million barrels per day, the current plan is to gradually add 138,000 b/d starting in April. In total the 2.2 million b/d cut is just a fraction of the total 5.85 million b/d cut the Cartel has been withholding since 2022, which in total amounts to about 5.7% of global supply.
Crude oil prices rose on Friday after reports emerged that the White House is considering a plan to intercept, inspect, and divert Iranian crude oil tankers at sea. This would be based on an international agreement aimed at curbing the spread of weapons of mass destruction, according to unnamed sources cited by Reuters. U.S. Treasury Secretary Scott Bessent stated that the Trump Administration seeks to drastically reduce Iran’s oil exports, warning, “If I were an Iranian, I would withdraw all my money from the rial.” Tehran’s oil exports generated $53 billion in 2023 and $54 billion the year before, according to U.S. Energy Information Administration estimates. Yesterday President Trump said he sent a letter to Iran’s Supreme Leader Khamenei asking for a meeting to discuss Iran’s nuclear program, with Trump mentioning that “There are two ways Iran can be handled, militarily or you make a deal”.
Last week’s U.S. Energy Information Administration’s report showed U.S. commercial crude oil inventories increasing by +3.6 million barrels (against a forecast of +0.8mb), to a total of 433.8 million barrels, seasonally inventories are about 4% lower than the 5 year average. U.S. crude oil imports averaged 5.8 million barrels per day last week, a decrease of -106,000 barrels per day. Over the last four weeks, U.S. imports have averaged about 6 million b/d, seasonally that is about 10.7% over the same 4 week seasonal period. U.S. crude oil refinery inputs averaged 15.4 million barrels per day last week, which came in about -346,000 b/d less than the previous week. The EIA said total commercial petroleum inventories decreased by -4.6 million barrels last week. For the third consecutive week the Department of Energy did not add to the Strategic Petroleum Reserve.
Last Friday’s Baker Hughes Rig Count showed oil rigs staying the same as the prior week, year-over-year oil rigs are down 18.
The S&P, Dow Jones and Nasdaq indexes all finished lower, with the Nasdaq having its single biggest daily decline since 2022, while the U.S. Dollar Index closed higher by +0.09%.
Tomorrow the API will release its weekly estimate on U.S. commercial crude oil inventory. Wednesday EIA will release its weekly report and there will be fresh U.S. CPI numbers from February. Thursday there will be new U.S. initial jobless claims and February’s U.S. PPI figures. Friday is the deadline for Congress to avoid a federal government shutdown.
Price Thoughts – Crude seems to be setting a new trading range between the 65-67 handles. Crude felt some of the weight of the broader market as assets were hammered today across the board, with stock indexes completely erasing their gains since September-November of last year, as the debate continues over the impact of Trump’s tariffs and recession fears. Last week set the seventh consecutive weekly loss for WTI, which is the longest streak since November 2023.
President Trump has added a lot of volatility to the markets across the board, and who knows how long these tariffs will or won’t last, or how soon sanctions come off Russia, or how OPEC handles its April production increases, or what happens in the Middle East, or how much new Chinese stimulus boosts their economy. What has really sent us so sharply lower to start the year, has been the nearby lack of global demand and overabundance of barrels available, in addition to cooling economies around the world, which has moved the market to where it is now and potentially pushing prices lower, in my opinion. $65 has been a major support figure over the last year. To the upside there’s resistance near $67, above that $70, above that $74.50. Longer term I think we are still leaning more into the $65-$75 range rather than the $70-$80 range for 2025 for WTI.
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Jim Rinaudo
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