The March WTI (CLH25) trading session settled at 73.16 (+0.63) [+0.87%], a high of 74.70, a low of 72.05. Cash price is at 72.49 (-0.26), while open interest for CLH25 is at 306,594. CLH25 settled above its 5 day (72.84), below its 20 day (74.68), above its 50 day (71.41), above its 100 day (70.25), above its 200 day (72.07) and below its year-to date (74.52) moving averages. The COT report (Futures and Options Summary) as of 1/31/25 showed commercials with a net short position of -307,656 (a decrease in short positions by +31,860 from the previous week) and non-commercials who are net long +281,209 (a decrease in long positions by -40,764 from the previous week).
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Mexico and the Trump Administration were able to work out a deal this morning that would see Mexico immediately deploy 10,000 Mexican soldiers to the Mexico-U.S. border while America would delay the 25% tariffs on Mexican goods until March 1st. Writing on his Truth Social platform, President Trump said, “I just spoke with President Claudia Sheinbaum of Mexico. It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States.” and “We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico.”. Over the weekend President Sheinbaum proposed putting on retaliatory tariffs on imported goods from the U.S., however she did not provide further details. Per USAfacts.org, Mexico accounts for about 11% of America’s total petroleum exports, while Mexico accounts for about 11% of total crude oil imports into the United States.
President Trump and Canada’s Prime Minister Justin Trudeau spoke over the phone at 3:00 EST, about a half hour later in an X post Trudeau said, “I just had a good call with President Trump,” and “Proposed tariffs will be paused for at least 30 days while we work together,”. Previously on Saturday, Canada’s Prime Minister announced that there would be 25% retaliatory tariffs on $155 billion worth of U.S. goods; it will now have to wait and be seen if these tariffs are put on a month from now. In 2023 the United States imported 4.1 million barrels per day of petroleum products, according to customs data. There is some confusion and debate over whether the tariffs will apply to Canadian oil that has been re-exported from a third party country that had originally purchased Canadian oil then sold it back into the U.S. market. Canada accounts for more than half of America’s total petroleum imports on a yearly basis, while Canada accounts for about 8% of America’s yearly petroleum exports, per USAfacts.org. Last Friday’s Baker Hughes rig count report showed Canada’s oil rig count up by 12, to a total of 186.
Energy Secretary nominee Chris Wright, the CEO of Denver based oil company Liberty Energy, is expected to be confirmed by the Senate this week. President Trump again threatened to put tariffs on the European Union this morning, although details so far at the time of this post have been brief. Speaking to the BBC Trump said, “I wouldn’t say there’s a timeline, but it’s going to be pretty soon.” in regards to EU tariffs. After 26 consecutive months of contraction, the U.S. ISM Manufacturing PMI expanded in January. January’s ISM Manufacturing PMI hit 50.9, beating forecasts of 49.5, and grew from Decembers 49.2. An updated weather forecast for February has raised the probability of another Arctic Blast for much of the Midwest and Northeast USA for this week and next. The S&P, Dow Jones and Nasdaq indexes all closed lower, while the U.S. Dollar Index closed higher by +0.09%.
This morning, leaders from OPEC+ gathered at the Joint Ministerial Monitoring Committee, where the cartel said it has not changed its decision to begin gradually unwinding 2.2 million barrels per day of voluntary production cuts until April.
On Saturday, President Trump imposed 10% tariffs on Chinese goods, which are set to begin tomorrow, in response China’s Commerce Ministry said it would challenge Trump’s tariff decision at the World Trade Organization. At a press briefing in the oval office this morning, President Trump said “We will speak to China over the next 24 hours, probably” and “China tariffs will go up if we can’t make a deal”, later in the day, the White House Press Secretary confirmed that President Trump would speak with China’s President Xi within the next 24 hours. This morning, Caixin, a privately held Beijing based business and investigative journalist media group, released their January Manufacturing PMI survey for China, which showed the index contracting from December’s 50.5, to January’s 50.1, the figure came in below the Reuters forecast of 50.5. China’s financial markets will be closed for the Lunar New Year celebration through Wednesday.
Russia’s Deputy Prime Minister Alexander Novak said this morning that Russia will increase its oil production in April, saying Russia expects to see an increase of +1.4 million barrels per day in 2025.
Vitol, the largest independent energy commodities trading company in the world, said in their new forecast that they expect global demand for crude oil to stay steady until at least 2040, with global demand to peak at ~110 million barrels per day near the end of this decade.
Last week’s EIA report showed U.S. commercial crude oil inventories increasing by +3.46 million barrels, above forecasts of a +3.2 million barrel build, bringing inventories to a total of 415.1 million barrels. Crude oil refinery inputs averaged 15.2 million barrels per day, lower than the previous week’s report by 330,000 barrels per day. Refineries operated at 83.5% capacity, lower than the previous week’s 85.9% capacity. U.S. oil imports decreased by -297,000 barrels per day compared to last week’s report, to a total of 6.448 million barrels per day. U.S. oil exports averaged 3.686 million barrels per day. The EIA showed a draw of 326,000 barrels from the Cushing, Oklahoma Hub. Last week’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. U.S. production was down 237,000 barrels per day. U.S. crude oil inventories are about 6% below the five-year seasonal average. This was the first week of inventory builds for crude oil seen in the API and EIA weekly reports following nine consecutive weeks of inventory draws. Last Friday’s Baker Hughes U.S. oil rig count showed domestic rigs increased by 7, to a total of 479.
Looking ahead – there will be a new API weekly report tomorrow, with the EIA releasing their newest weekly report on Wednesday. Israel’s Prime Minister Netanyahu is expected to meet President Trump in Washington tomorrow and President Trump will hold a phone call with China’s President Xi. On Friday, the U.S. will release its unemployment data for January and Baker Hughes will release the newest rig count figure. It should be noted this is an important week for the U.S. stock indexes, as major companies will release earnings reports, including Alphabet and Amazon.
Price Thoughts – March crude oil rallied all the way up towards $75 at the open before trading sharply lower after Mexico was able to work a deal with Trump, before finishing in the green. I don’t believe this late breaking Canada tariff delay has been priced in so close to the close. Tomorrow will be a critical test of our 200 day moving average support line that has held the last few weeks, and was tested hard again today. I believe prices will take cues from this week’s API and EIA reports if they show U.S. inventory builds for a consecutive week. Our 200 day moving average is the current support near $72.07. 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 we have support near the 200 day MA which is close to $70,with a round figure like that giving support off that fact alone, and below that $65 is a major support figure.
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Jim Rinaudo
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