The April WTI (CLJ25) trading session settled at 70.71 (-0.43) [-0.60%], a high of 71.88, a low of 70.50. Cash price is at 71.31 (-0.06), while open interest for CLJ25 is at 274,207. CLJ25 settled below its 5 day (71.62), below its 20 day (72.50), below its 50 day (71.47), above its 100 day (70.27), below its 200 day (71.50) and below its year-to date (73.06) moving averages. The COT report (Futures and Options Summary) as of 2/7/25 showed commercials with a net short position of -274,046 (a decrease in short positions by +33,610 from the previous week) and non-commercials who are net long +244,944 (a decrease in long positions by -36,265 from the previous week).
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On Wednesday President Trump posted on his Truth Social platform that he had “a lengthy and highly productive phone call” with Russian President Putin, adding that they had agreed to “have our respective teams start negotiations immediately.” Following that, President Trump spoke with President Zelensky, stating, “He, like President Putin, wants to make PEACE. We discussed a variety of topics related to the war, but mostly the upcoming meeting on Friday in Munich, where Vice President JD Vance and Secretary of State Marco Rubio will lead the delegation. I am hopeful that the results of that meeting will be positive. It’s time to stop this ridiculous war.” This statement follows an interview earlier in the week with President Zelensky, where he suggested he would consider exchanging territory with Russia as part of a deal to end the conflict. Later in the day in an Oval Office interview Trump said Saudi Arabia would host a meeting between himself and Putin soon. Treasury Secretary Scott Bessent is expected to meet with Zelensky soon. Bloomberg reported that Russia’s crude oil production dipped to 8.962 million barrels per day in January. Russia has been faced with increased logistical problems since the U.S.’s latest sanctions on Russian oil shipments to China and India. Russia’s January production came in 16,000 barrels below its agreed upon OPEC+ quota. Bloomberg also reported that, according to ship-tracking data, around 60% of the active “shadow fleet” tankers sanctioned by the Biden Administration in January have ceased transporting crude oil entirely.
U.S. Treasury Secretary Scott Bessent said the Trump Administration plans to cut down Iran’s crude exports to 100,000 barrels per day, currently Iran is exporting 1.5 million b/d, the cutdown to 100,000 b/d would be about a 90% reduction of current exports. The International Energy Agency said Iran produced 3.3 million barrels per day in January, accounting for 3% of global oil supply. In OPEC+’s monthly report the cartel stuck to both of its global oil demand forecasts from last month for 2025 and 2026. For 2025 OPEC+ expects demand to rise by +1.45 million barrels per day, and increase by +1.43 million b/d for 2026.
President Trump announced he would slap reciprocal tariffs on any country putting tariffs on American goods, the tariffs he said, may “possibly” start April 2nd, after the administration goes through a “study” period on appropriate measures to go forward with. The 25% tariffs he’s previously discussed putting on the European Union he said would be lowered to 2.5%. This follows comments the EU’s trade minister made when he declared the bloc would implement “firm and proportionate” countermeasures on any tariffs the Trump Administration would apply. A White House official later said the Administration was still not ruling out a “flat global tariff” Secretary of Commerce Howard Lutnik said the reciprocal tariffs could start as soon as April 2nd.
This week’s Energy Information Administration Petroleum data for the week ending February 7, 2025 showed U.S. crude oil imports averaging 6.3 million barrels per day, a decrease of -606,000 b/d from the previous week. U.S. commercial crude oil inventories increased by +4.1 million barrels, to a total of 427.9 million barrels, about 4% below the five-year seasonal average. U.S. crude oil refinery inputs averaged 15.4 million b/d, an +82,000 barrel increase from the week prior. U.S. refineries operated at 85% capacity. Total U.S. oil production hit 13.494 million barrels b/d, about 200,000 b/d lower than the all-time high set in December 2024. The Cushing, Oklahoma hub had a build of 872,000 barrels. This was the third consecutive week the EIA has reported commercial crude inventory builds, and the largest inventory build so far in 2025 after beating last week’s +3.46 million barrel build. The American Petroleum Institute’s weekly report estimated U.S. inventories with a +9.043 million barrel build (against a +2.8 mb forecast) while the Cushing, Oklahoma hub had a build of +407,000 barrels.
The U.S. Energy Information Administration’s latest Short-Term Energy Outlook released this week showed the group raising their 2025 crude oil production forecast slightly, previously from 13.55 million barrels per day to the current 13.59 million b/d forecast. Their 2026 outlook on crude production also increased from 13.62 million barrels per day to 13.73 million b/d. They predict U.S. refinery output decreases by 190,000 barrels per day in 2025 and 180,000 b/d in 2026. They left their 2025 Brent average price forecast of $74 relatively unchanged from last month’s Short-Term Energy Outlook report. In terms of their 2025 global inventory outlook the EIA said, “We still anticipate that global oil inventories will fall by 0.5 million b/d in the first quarter of 2025 (1Q25) because of OPEC+ production cuts, which the organization recently reaffirmed. However, we expect global oil inventories will begin increasing once OPEC+ begins raising production, starting in April 2025. These production increases combined with expectations of relatively weak global oil demand growth will lead to a 0.9 million b/d increase in global oil inventories in the second half of 2025 (2H25) and a 1.0 million b/d increase in 2026”.
The U.S. Energy Information Administration (EIA) also released an in-depth estimate on China’s 2024 crude oil import and refinery data this week. The EIA estimates China imported 11.1 million barrels per day in 2024, down from 11.3 b/d in 2023, nearly a 2% decline, while China’s domestic crude production averaged 4.3 million b/d. Chinese refiners imports from Russia increased for a third consecutive year, averaging 2.2 million b/d, with a 1% increase from 2023. China’s imports from Saudi Arabia, their second-largest crude oil source, decreased for the third consecutive year, averaging 1.6 million b/d, a drop of 9% compared to 2023. The EIA predicts China’s consumption will outpace China’s domestic production, leading to net imports increasing for 2025 and 2026. China’s 10% levying on crude oil from the United States took effect Monday, as well as 15% tariffs on coal and LNG imports. China’s Shanghai based CSI 300 Index rose +0.87%.
Today’s Baker Hughes Oil and Gas Rig Count showed rigs increasing by 2, to a total of 588, the third consecutive week of rig increases, although seasonally still about 5% below average and down 33 rigs compared to this time last year.
Oil Price reported that imports of Mexico’s crude oil by U.S. refiners decreased by 40% month-over-month, to less than 600,000 barrels per day, as Gulf Coast refiners have begun seeking other sources of similar graded oil.
January’s Industrial Production increased by 0.5% over December, the Federal Reserve’s Board of Governors revealed this morning. January’s Consumer Price Index was shown to have climbed the most since August 2023, with headline PPI increasing 0.4% month-over-month (against a forecast of 0.3%) and 3.5% year-over-year (against a forecast of 3.3%. This was the 13th straight month without a month-over-month decline in Producer Prices. Headline CPI was shown to have increased for the 7th straight month, coming in slightly hotter than expected, with the energy index rising 1.1% over the last month, within that the gasoline index rose 1.8%. U.S. retail sales dropped the most in nearly two years in January, with a larger than expected drop, reported by the Commerce Department. Addressing the Senate Banking Committee earlier in the week Fed Chair Powell said “we do not need to be in a hurry to adjust our policy stance” and that overall the economy is “strong”, but he cautioned that inflation continues to ease above the Fed’s 2% goal. The rest of this week and stretching into next week much of the Northern Hemisphere will continue to face subfreezing temperatures as the current Arctic Blast system persists. The S&P, Dow Jones and Nasdaq indexes finished mixed-to-unchanged, while the U.S. Dollar Index closed lower by -0.48%.
Price Thoughts – The builds in commercial U.S. crude inventories shown in the weekly EIA report stalled the rally we were on, and the prospect of Russian oil sanctions being taken off have fueled the current sell off. Thankfully, cooler heads have prevailed for the time being and it looks like Israeli-Hamas ceasefire will hold through the weekend, which means there shouldn’t be any new Iranian threats or a return of Houthi’s disrupting trade in the Red Sea, all this leads to a reduced war-premium.
We broke through our 5-50-200 day moving averages to the downside this week, which could fuel a sell off to the support near $70 (which held again this week), below that $67.50 and below that $65 has been a major support figure over the last year.To the upside there’s resistance near $74.50 and the upper $79.50 region. Longer term I think we are still leaning more into the $65-$80 range rather than the $70-$85 range for 2025 for WTI.
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Jim Rinaudo
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