The January WTI (CLF25) trading session settled at 68.75 (-0.49) [-0.71%], had a high of 69.96, a low of 68.64. Cash price is at 69.44 (+0.28), while open interest for CLF25 is at 366,848. CLF25 settled above its 5 day (68.59), below its 20 day (69.20), below its 50 day (69.74), below its 100 day (71.59), below its 200 day (73.61) and below its year-to-date (73.33) 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). 

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The EIA’s Weekly Petroleum Data for the week ending November 15, showed U.S. crude oil imports averaging 7.7 million barrels per day, an increase by 1.2 million barrels per day over the previous week, this above the four-week average of 6.6 million barrels per day. U.S. commercial crude inventories rose by 545,000 barrels from the previous week, totaling 430.3 million barrels, American crude inventories are still about 4% lower than their seasonal five-year average. American refineries operated at 90.2% capacity and inputs averaged 16.2 million barrels per day. Yesterday's API data showed a larger than expected +4.75 million barrel build in U.S. crude stocks, this was against a forecast of a +1 million barrel build. The Cushing hub had a drawdown of 140,000 barrels, following the previous week's drawdown of 688,000 barrels. 

Markets reacted Monday morning to President Biden's shift in policy regarding Ukraine's use of American long-range missiles to strike targets within Russia. 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. Yesterday Russia’s Ministry Of Defense said Ukraine fired the said long-range missiles into the Bryansk region. This morning the U.S. closed their embassy in Kyiv citing that they “received specific information of a potential significant air attack” and President Biden approved the use of anti-personnel landmines as well as another new $275 million dollar ammunition package to Ukraine. Additionally Ukraine launched United Kingdom supplied Storm Shadow missiles inside Russian Territory for the first time, The BBC reported. Bloomberg News released comments made by Kremlin spokesperson Dmitry Peskov today who said “Russia is prepared to discuss a potential cease-fire in Ukraine with U.S. President-elect Donald Trump”, and that “Moscow could be open to negotiations on halting the fighting roughly along current battle lines”. In the Middle East there were reports from United Nations watchdogs that Iran’s weapons-grade uranium had grown vastly since last reported in August, reaching 14,560 pounds worth and up 1,880 pounds since August. This comes a day after The New York Times reported that Iran was “Suggesting Pausing Its High Levels of Uranium Enrichment” to a purity of 60%, which is under the 90% threshold needed to produce a nuclear weapon per the International Atomic Energy Agency. 

Western Europe's largest crude oil refinery, the Johan Sverdrup, resumed production yesterday afternoon after suffering a power outage and shutting in production for a day, Equinor said in a statement.

President-elect Trump has nominated Chris Wright, the CEO of Denver-based Liberty Energy, the second largest hydraulic fracking company, to be his Energy Secretary. This morning Trump tapped Howard Lutnick for his Commerce Secretary pick and said Lutnick will also have “direct responsibility” over the Office of the U.S. Trade Representative, which traditionally was a separate entity. Trump is expected to make his Treasury Secretary nominee by the end of the week. The dollar index (DXY) closed higher by +0.44%

It’s looking to me like the forecast for the Northern Hemisphere is going to bring colder temps this winter, which I’ll dig into more as the temps continue to drop. Travel Group AAA predicts up to 80 million Americans will be traveling for the Thanksgiving holiday coming up next week, the 80 million figure is a 1.7 million increase compared to last year.

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 short term 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, but there's still a weigh down 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 $65 to middle $70’s range, for long as there’s no black swan events.

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Jim Rinaudo

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