The January WTI (CLF25) trading session settled at 69.17 (+2.25) [+3.36%], had a high of 69.37, a low of 66.53. Cash price is at 67.03 (-1.65), while open interest for CLF25 is at 348,664. CLF25 settled above its 5 day (68.18), below its 20 day (69.37), below its 50 day (69.57), below its 100 day (71.78), below its 200 day (73.63) and below its year-to-date (73.37) moving averages. The COT report (Futures and Options Summary) as of 11/12 showed commercials with a net short position of -235,418 (a increase in long positions by +4,726 from the previous week) and non-commercials who are net long +211,700 (a decrease in short positions by -12,226 from the previous week).
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
Markets are responding to President Biden’s shift in policy regarding Ukraine’s use of American missiles to strike targets within Russia. This decision comes with only two months remaining in his presidency and directly opposes President-elect Trump’s commitment to negotiate a peace agreement between Russia and Ukraine upon taking office. Previously, President Putin warned that any Ukrainian use of American-made missiles on Russian soil would be viewed as an act of war by the United States.
China’s oil demand continues to show more signs of weakness, as Reuters reported a significant reduction in the country’s crude oil surplus in October. The surplus dropped to 550,000 barrels per day for October, down from 930,000 barrels per day in September. However domestic crude production rose 2.5% year-over-year to 4.04 million bpd, while imports reached 10.53 million bpd. China’s Shanghai CSI 300 Index closed 0.46% lower today and is 4.43% lower over the last 5 sessions
Western Europe’s largest crude oil refinery, the Johan Sverdrup operated in Norway and owned by Equinor, suffered a power outage this morning. Equinor said work to bring the oilfield back online was underway, though no set time figure was given as to when it would be.
Saudi Arabia posted their largest export figure in three months, the Joint Organizations Data Initiative reported this morning. Exports for the Kingdom increased by 80,000 barrels per day, bringing it to a total of 5.75 mb/d. Starting in January OPEC+ plans to add 180,000 barrels per day, gradually restoring 2.2 million barrels per day by the end of next year. OPEC+ is currently withholding 5.86 million barrels per day (roughly 5.7% of global crude demand). Last week OPEC+ cut their global oil demand forecast for this year and for 2025 for the fourth consecutive month. The institution sees oil consumption increasing by 1.8 million barrels per day in 2024, averaging 104 million barrels per day globally, this is 107,000 barrels per day less than the previous forecast. For 2025 OPEC+ predicts that daily global demand will increase by 1.5 million barrels, 103,000 barrels less than the previous forecast. OPEC+ cited the lessening demand out of China, India and Africa as reasons for lowering the forecast. OPEC+ is scheduled to have their next meeting on December 1st.
Last week The International Energy Agency (IEA) raised their global demand growth forecast for 2024 from 862,000 barrels per day to 921,000 barrels per day, this figure is less than half that was recorded in 2023. The IEA lowered their demand growth forecast for 2025 to 990,000 barrels per day, citing supply glut concerns. The IEA is predicting a surplus of over 1 million barrels a day for 2025. Last week’s EIA Petroleum Status Report showed U.S. Commercial crude oil inventories rose by 2.1 million barrels, higher than the 300,000 barrel increase that was forecasted. Seasonally U.S. crude inventories are about 4.6% below their 5 year average. The inventory for the Strategic Petroleum Reserve grew slightly from 387.3 million barrels to 387.8 million barrels. Crude imports increased by 269,000 barrels per day, averaging 6.5 million barrels per day. Domestic crude oil production was lowered by 100,000 million barrels per day. American crude oil refineries operated at 91.4% capacity. The American Petroleum Institute reported that commercial inventories decreased by 770,000 barrels at the Cushing Hub, against a forecast for a million barrel build. Elsewhere Morgan Stanley cut its demand forecast for this year to 800,000 barrels per day and lowered their barrel price forecast for the first quarter of 2025 to $72.
Hurricane Sara is no more and has been downgraded to a Tropical Rainstorm, tracking across the Gulf Coast, it is expected to bring heavy flooding in the region according to AccuWeather.
Price Thoughts – Personally I would be looking to buy any price breaks under $66 at the moment. Settling below $67 this week could see a further price break towards the next support line around $65 flat, which has been a major support line over the last few years. To the upside ~$72 is still the resistance, and market jitters could see us test the upside this week. In the short term I would expect higher volatility with the current geopolitical tensions.
Now that Donald Trump has been elected President, I believe he’ll fulfill his promise to “Drill baby, drill”, significantly increasing the output capacity for American energy, passing executive orders as soon as day one in office. Keep in mind that the U.S. currently produces 13.5 million barrels of oil per day, a figure that’s nearly 30% higher than it was just four years ago. Over the past 50 years, U.S. energy production has grown at a faster rate than consumption, and since 2019, America has been a net energy exporter. We shall see where that “million barrels per day” number goes after Trump is sworn in. Drastically increasing American energy output could create an interesting market share conflict with the OPEC+ nations, but that’s another story, potentially down the line. Then there’s China, how much stimulus they choose to add to bolster their economy could determine crude prices significantly in the short and long term, I believe, and we’ll have to wait and see the impact Trump’s tariffs have. And then there’s the Middle East situation, which could simmer or explode, and even if the violence ends I believe we’ll see new economic sanctions on Iran. With the prevailing themes of a stronger dollar, potential trade wars, increasing supply, slowing economies and a lack of global demand front running price sentiment, it leads me to believe in 2025 crude oil prices will not end up averaging in the $85-$95 range, rather I see crude prices trading in the $65 to middle $70’s range, for long as there’s no black swan events.
If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now
You can reach me at – JRinaudo@walshtrading.com
Follow Walsh Trading on X – @Walsh_trading
Jim Rinaudo
312-957-4731
Walsh Trading
311 S Wacker Suite 540
Chicago, IL 60606
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.