Crude Oil Posts Second Consecutive Week of Gains

The May WTI (CLK25) contract settled at 68.28 (+0.21) [+0.31%], high of 68.65, low of 66.63. Spot price is 68.08 (+0.95), open interest for CLK25 is 321,089. CLK25 settled above its 5 day (67.24), above its 20 day (67.64), below its 50 day (70.54), below its 100 day (69.63), below its 200 day (70.55) and below its year-to date (70.65) moving averages. 

The June Brent Crude (QAM25) contract settled at 71.61 (+0.14) [+0.20%], high of 71.98, low of 71.00. Spot Brent price is 72.00. QAM25 settled above its 5 day (70.82), below its 20 day (70.71), below its 50 day (73.54), below its 100 day (72.91), below its 200 day (74.32) and below its year-to-date (73.67) moving averages.

Today’s COT report (Futures and Options Summary) as of 3/18/25 showed commercials with a net short position of -205,308 (a decrease in short positions by 7,321 from the previous week) and non-commercials who are net long +186,208 (a decrease in long positions by 8,116 from the previous week)

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Today’s Baker Hughes weekly rig count showed the number of U.S. oil rigs decreased by -1, to a total of 486, year over year it is -23 rigs lower. U.S. gas rigs increased by +2, to a total 102.

Yesterday the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a "teapot" oil refinery and its CEO for purchasing and refining hundreds of millions of dollars’ worth of Iranian crude oil. This includes oil from vessels connected to the Houthis and the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL). OFAC imposed sanctions on 19 entities and vessels responsible for shipping millions of barrels of Iranian oil, which are part of Iran’s “shadow fleet” of tankers supplying refineries like China’s Luqing Petrochemical. OFEC placed sanctions on China’s teapot refinery Shandong Shouguang Luqing Petrochemical in the Shandong Province, which has purchased millions of barrels of Iranian oil, valued at around half a billion dollars. Luqing Petrochemical received Iranian oil transported by shadow fleet vessels, some of which had already been sanctioned for their role in transporting petroleum linked to the Houthis. According to Kpler, February Iranian crude oil exports surpassed 1.8 million barrels per day. China's Shanghai 300 Index closed lower by -1.52%. 

Reuters reported that OPEC+ yesterday issued a new schedule for seven members of the cartel, including Russia, Iraq and Kazakhstan to make further crude output cuts in order to meet agreed levels for the upcoming April OPEC+ production increases. The new plan outlines monthly cuts ranging from 189,000 barrels per day to 435,000 bpd. These cuts are scheduled to continue until June 2026. OPEC+ is set to increase output by 138,000 bpd in April.

Chevron Chairman Mike Wirth says Chevron is talking with the Trump administration about continuing to allow a waiver that allows Chevron to produce and export crude oil out of Venezuela, previously the Trump Administration was said to be considering axing said waiver, Mr. Wirth said to Bloomberg. 

This week's U.S. Energy Information Administration weekly report showed U.S. crude oil inventories had a build of +1.7 million barrels (much lower than API’s build of +4.593 million barrels estimate), to a total of 437 million barrels. Seasonally inventories are about 5% lower than their five-year average. U.S. crude oil imports averaged 5.4 million barrels per day last week, a decrease of -85,000 bdp compared to the week prior. U.S. oil refinery inputs averaged 15.7 million barrels per day, a -45,000 bpd decline compared to the prior week, refineries operated at 86.9% capacity last week. Total commercial petroleum inventories increased by +1.6 million barrels last week. Total petroleum products supplied over the last four-week period have averaged 20.6 million barrels per day, up +2.5% year-over-year. U.S. crude oil inventories have had builds 7 out of the last 8 weeks.

The Dow, S&P and Nasdaq all closed higher in a choppy session, the S&P 500 broke a four-week streak of price losses. The Dollar Index settled at 104.15 (+0.29%)

Price Thoughts - Brent and WTI ended with their second consecutive week of price gains. Another day of headline trading came in yesterday via the U.S. Treasury placing new sanctions on Iran’s “shadow fleet”, these tankers are accused of shipping to China under the radar. There was a bigger draw than forecasted in petroleum supplies the EIA reported this week, adding to bullish conditions.

WTI Crude oil has broken above its $67 long-term support line, while Brent has sustained above its $70.00 level. Again the headline trading is leading the market move, while the global supply/demand and weakening USD situation has set a ceiling and floor, in my opinion.

$65 has been a major support figure over the last year.  To the upside there’s still resistance in the $67 handle, above that $70, above that $74.50.  Longer term I think we are still leaning more into the $65-$75 range rather than the $70-$80 range for 2025 for WTI. 

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