The December WTI (CLZ24) trading session concluded at $68.61, an increase of $1.40 or 2.08%, with a session high of $69.17 and a low of $67.28. The cash price stands at $67.17, a decrease of $0.18. Open interest for CLZ24 is recorded at 354,114. CLZ settled below its 5-day moving average at $69.10, 20-day at $71.44, 50-day at $70.28, 100-day at $73.21, and 200-day at $74.30.
According to the COT report (Futures and Options Summary) as of October 22, commercials held a net short position of -229,875, which is a decrease in short positions by +16,937 compared to the previous week. Non-commercials are net long by +203,990, a decrease in long positions by -9,230 compared to the previous week.
Reuters, citing unnamed sources, reported that OPEC+ might postpone their plans to increase oil production by 180,000 barrels per day, which was initially set to begin in December.
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OPEC+ is set to hold their next meeting on December 1st. The EIA weekly petroleum status report for today showed a draw of -515,000 barrels in crude inventories, contrary to a +1.37m/b build forecast. U.S. crude imports averaged 6 million barrels per day last week, a decrease of -456,000 barrels compared to the prior week. U.S. crude refineries were operating at 89.1% capacity. U.S. crude oil inventories are approximately ~4% below their five-year seasonal average. The Cushing hub witnessed a +681,000 barrel build. Tuesday’s API report indicated a decline of 573,000 barrels in crude stocks. Yesterday, the U.S. Energy Department announced plans to add 3 million barrels to the Strategic Petroleum Reserve by May of next year. Today’s U.S. GDP number for the July-September quarter was 2.8%, slightly weaker than the previous 3% covering the April-June quarter.
Reuters reported yesterday that China is considering the issuance of roughly $1.4 trillion in extra debt over the next few years. This is part of a recent series of stimulus packages aiming to revive their staggering economy. China’s parliament is set to hold a major policy meeting the first week of November, which is conveniently timed up with the U.S. election. Sources told Reuters they expect further stimulus packages to be added by China if Donald Trump is elected to President next week, citing trade-war and tariff concerns. The Shanghai CSI 300 Index closed 0.90% lower today.
Axios reported that Senior White House Officials will be traveling to Israel tomorrow and meeting with Prime Minister Netanyahu to help push for a ceasefire between Hezbollah and Israel. According to Reuters Israel is considering ending its conflict in Lebanon against Hezbollah with a 60-day suspension of military activity to facilitate a lasting peace deal.Crude prices cratered by over $4 on Monday after Israel’s attack on Iranian missile sites avoided crude and nuclear facilities. This was seen as more restrained than many analysts and traders had anticipated. The limited strike has, for now, erased the war premium factored into the market. Prices had dropped from their peak a few weeks ago and offset the roughly 4% gains in oil benchmarks from last week. As a result, the market is returning to the lower demand and higher output conditions. Monday was the largest single-day decline for WTI in two years.
Price Thoughts? Settling above the crucial support line of $67 today may cause some short-term price recovery. Either way, I would continue to expect volatility until the U.S. election results are settled. Looking at charts here, I now see the next support line around ~$65.Oil prices are currently trading higher off rumors surrounding OPEC+. The support line is at $67, with a potential drop to $60 if this level is breached. Conversely, resistance is around $72, which could push prices up to $77 if broken.
OPEC+ is maintaining their plan for output increases starting in December, a decision that is significant and may not be fully reflected in futures markets yet. Furthermore, if Donald Trump is elected President, he is expected to increase American energy output capacity significantly, fulfilling his ‘Drill baby, drill’ promise. This could lead to a market share conflict with OPEC+ nations in the future. China’s economic stimulus decisions could also have a substantial impact on crude prices in both the short and long term. Considering the stronger dollar, potential trade wars, increasing supply, slowing economies, and lack of global demand, I believe that in 2025, crude oil prices will not average in the $85-$95 range. Instead, I foresee prices trading in the high $60s to $75 range, barring any black swan events.
