Yesterday’s Settlement: 70.29, up +1.70 [+2.48%]
WTI Crude Oil futures rallied strongly yesterday off technical buying and geopolitical / sanction risk. Treasury secretary Janet Yellen said that lower oil prices might allow further sanctions against Russia.
Also, President Donald Trump’s pick for national security adviser, Mike Waltz, said in a Fox News interview “You’re going to see a huge shift on Iran”, he continued “We have to constrain their cash. We have to constrain their oil. We have to go back to maximum pressure, number one, which was working under the first Trump administration.”
The current administration has placed very strict sanctions and restrictions on Russian and Iranian oil in a very public manner, but in reality, they have done little to enforce these sanctions for fear of driving inflation higher. If the Trump administration works to enforce Iranian oil sanctions it could take 1.5 – 2.0 mil bpd of crude oil off the export market. Iranian pressure is a catalyst traders should watch moving forward.
Yesterday’s EIA report was fairly bearish for diesel and gasoline markets. The figures printed as follows [thousand bbls]:
- Crude: -1,425 vs -1,100 estimate
- Gasoline: +5,086 vs +1,200 estimate
- Distillates: +3,235 vs +1,000 estimate
- Refinery Utilization: -0.90% vs -0.10% estimate
Today, WTI Crude Oil futures are lower by -0.43 [-0.58%] to 69.89 after holding fairly steady overnight. Some stronger selling has come through late this morning after U.S. PPI figures reported hotter-than-expected inflation figures at 7:30 am.
Yesterday’s rally failed to settle above the upper band of our key three-star resistance level of 70.42. While we remain bullish in our medium-term outlook, we’d advise against any aggressive new long positioning at these levels. Having said that, a settlement above 70.42 would be a fairly bullish setup, with price likely to test 71.69. For today, the intraday pivot and point of balance is set at 69.50, intraday resistance is at our longer-term, three-star resistance level of 70.42, initial support is at…
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