The March WTI (CLH25) trading session settled at 75.83 (-1.56) [-2.02%], a high of 77.86, a low of 75.05. Cash price is at 77.85 (-0.81), while open interest for CLH25 is at 373,491. CLH25 settled below its 5 day (77.26), above its 20 day (73.31), above its 50 day (70.49), above its 100 day (69.77), above its 200 day (72.26) and above its year-to date (75.19) 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 Trump wasted no time in keeping to his promise to “drill, baby, drill”, declaring a “National Energy Emergency” after taking office yesterday, signing several executive orders focused on American energy. He revoked President Biden’s last-minute offshore oil and gas leasing ban (this particular executive order may be subject to litigation), put a freeze on renewable energy projects, and withdrew the U.S. from the Paris Climate Agreement. Additionally, Trump stated that he plans to impose up to 25% tariffs on goods and products from Mexico and Canada by February 1st, and his administration will consider eliminating electric vehicle subsidies. Surprisingly, Trump was relatively mute on his next steps regarding trade with China and the potential tariffs on China that he has mentioned prior to his inauguration, in my opinion. The major three American indexes closed higher while the U.S. Dollar Index closed lower by -1.25%.
This morning the EIA (U.S. Energy Information Administration) released a report forecasting U.S. crude oil production to reach a new all-time high in 2025, averaging 13.5 million barrels per day. Specifically citing Brent oil, they forecast average prices to fall from 2024’s $81 per barrel to $74 per barrel in 2025. The reason for the price reduction the EIA says is “mainly because of growing production in countries outside OPEC+ and demand growth that is less than pre-pandemic average. These factors reduce forecast oil prices because production outpaces consumption, increasing global oil inventories.” and “Significant uncertainty remains in all aspects of oil supply and demand, which will influence oil prices given any differences compared with our forecast. OPEC+ members might change their policies as they face the prospect of ceding further market share to countries outside of the group. U.S. crude oil and other liquids production has been highly sensitive to changes in crude oil prices, and a small difference in prices with our forecast would alter the growth or decline of U.S. production.”
Reuters, using official data from the Chinese General Administration of Customs, reported that China’s oil purchases from Saudi Arabia were lower by 9%, while imports from Russia increased by 1% setting a record high at 2.17 million barrels per day in 2024. China’s National Bureau of Statistics released its fourth-quarter GDP data last Friday, 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. The Shanghai based CSI 300 index closed relatively flat at +0.077% higher.
In the Mideast, Reuters reported that oil giant Saudi Aramco expects global oil demand to increase by +1.3 million barrels per day in 2025. A six-week ceasefire between Israel and Hamas began on Sunday.
New API weekly data will be released tomorrow and EIA weekly data will be released Thursday.
Price Thoughts – Today felt like a Trump reaction trade in my opinion, he delivered on what he said he’d do on day one by reversing Biden’s energy policies and we saw specs getting shorter. Feel like pointing out the dollar closing over a percent lower, over what some considered softer language from Trump when it came to tariffs, specifically on China and Canada, in my opinion. The weather in the states is still historically cold for much of the United States, and there’s conflicting February weather forecasts from what I’ve read. I think we have short term support at $75 (which was tested at 75.05 – the daily low today), 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 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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