The January WTI (CLF25) trading session settled at 68.30 (-0.24) [-0.35%], a high of 69.16, a low of 67.98. Cash price is at 68.56 (-1.34), while open interest for CLF25 is at 298,906. CLF25 settled below its 5 day (68.62), below its 20 day (68.98), below its 50 day (69.82), below its 100 day (70.68), below its 200 day (73.42) and below its year-to-date (73.15) moving averages. The COT report (Futures and Options Summary) as of 11/26 showed commercials with a net short position of -233,671 (a increase in short positions by -5,372 from the previous week) and non-commercials who are net long +226,431 (a increase in long positions by +7,277 from the previous week).

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OPEC+, led by Saudi Arabia and Russia, have agreed to delay their production unwinding until April 2025, which would last through September 2026, restoring 180,000 barrels per day until the currently withheld 2.2 million barrels per day are back online. The International Energy Agency predicts that even if OPEC+ continues to delay their production cuts through next year, that there will still be over a 1 million barrels per day surplus next year. 

This week’s U.S. Energy Information Administration report showed a crude inventory draw of -5.1 million barrels, against a forecast of a -717,000 barrel draw, seasonally U.S. crude oil inventories are roughly 5% lower than their five-year average. U.S. refineries were operating at a 93.3% capacity last week. U.S. crude imports averaged 7.3 million barrels per day, an increase of 1.2 million barrels per day over the previous week.This week's API (American Petroleum Institute) report showed crude inventories increasing by +1.23 million barrels, while the Cushing Hub had an increase of +112,000 barrels. 

Yesterday President-elect Trump announced that Peter Navarro will serve as his “Senior Counselor for Trade and Manufacturing”. Navarro in the past has expressed hawkish China positions in regards to trade and also, like Trump, is in favor of tariffs. Today’s Jobless Claims totaled 224,000 which was higher than economists forecasts. This figure comes after what many had viewed as a weaker-than-expected ADP private payrolls figure, with payroll numbers totalling 146,000 against a 165,000 forecast. Tomorrow November Unemployment data will be released. The Dollar Index (DYX) closed lower by -0.57%.

Price Thoughts - Crude seems for now to be content trading in the middle of its current range $68-$70.25, for roughly six weeks now crude has traded between $66.5 and $72.5. Personally I would be looking to buy any price breaks under $66 at the moment. Settling below $67 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 ~$70.25 is still the short term resistance with mid ~$72 after that. In the short term I would expect higher volatility with the current geopolitical tensions, but there's still a weight on prices via the demand situation. 

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 low $60’s to middle $70’s range, for long as there’s no black swan events.

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Jim Rinaudo

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