The January WTI (CLF25) trading session settled at 69.94 (+1.84) [+2.70%], a high of 70.23, a low of 67.91. Cash price is at 68.10 (+0.08), while open interest for CLF25 is at 328,618. CLF25 settled above its 5 day (68.71), above its 20 day (69.27), above its 50 day (69.86), below its 100 day (70.85), below its 200 day (73.46) and below its year-to-date (73.19) 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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Four unnamed sources have told Reuters that OPEC+ intends to extend its oil output cuts until the end of the first quarter of 2025. OPEC Plus’s December meeting has been pushed to this Thursday the 5th. Libya’s National Oil Corporation said the country's crude production has set a new high, producing 1.37 million barrels of crude per day. It was reported by Reuters that Iraq halted operations at the Basra Refinery over the weekend because of a backlog in fuel oil tanks. According to Reuters sources, no oil tanker has docked at the Khor Zuhair port since last week; this facility puts out roughly 260,000 barrels per day. 

Bloomberg reported that The North Sea crude oil market had its highest trading volume since 2008 on Monday, eight cargoes totalling roughly 5.6 million barrels of crude. 

The health of the U.S. economy will be under the microscope this week, with the release of important jobs data, Jobless Claims will be released Thursday and Unemployment data will be released Friday. Fed Chair Jerome Powell will be speaking tomorrow. Fed Governor Christoper Waller said that he “leans toward supporting” a rate cut at the Fed’s December 17-18 policy meeting. The CME’s FedWatch Tool currently projects a 73.8% chance of another rate cut in December. 

The “permanent” ceasefire deal between Israel and Lebanon is being tested, as both Hezbollah and Israel traded shots at one another yesterday. Israeli Defense Minister Katz declared today that if the ceasefire with Hezbollah were to deteriorate “there will no longer be an exemption for the state of Lebanon,” meaning Israel would not separate Hezbollah from Lebanon’s state military.  Yesterday, Israel’s Prime Minister Netanyahu said in response to the attacks that  “Hezbollah's Firing at Mount Dov constitutes a serious violation of the ceasefire, and Israel will respond forcefully”. Lebanon's state security said the ongoing activity is a “flagrant violation” of the ceasefire agreement. President Trump pronounced on Truth Social that if the Israeli hostages held by Hamas were not released by the time he assumes office that there would be quote “ALL HELL TO PAY in the Middle East”. In Syria, the over thirteen-year ongoing Syrian Civil War has intensified, with Syrian rebels seizing Aleppo.

China is set to hold the annual Central Economic Work Conference on December 11-12, where I expect further stimulus packages will be announced. China’s tax rebates on oil related exports dropped to 9% on Sunday.  China's stock market rallied strongly last week, today China’s Shanghai CSI 300 Index closed +0.11% higher.

This past Saturday President-elect Trump threatened the BRIC nations (Brazil, Russia, India, China, and South Africa) that if they continued to plan to move away from the Dollar that he would impose 100% tariffs on said countries. This coincides with his previous tariffs threats against Canada and Mexico, threatening to impose 25% on all products imported from both nations. Per Bloomberg, the U.S. imports roughly 4 million barrels per day from Canada, and accounts for more than half of America’s total yearly imports, while the U.S. accounts for about a third of Canada’s total crude oil exports. If this does come to pass, I think you could expect to see energy prices rise across the board.

Price Thoughts - Crude again tested its short term resistance level of $70.25 (getting all the way to $70.23) before selling back into the upper $69 level. Crude seems for now to be content trading in the middle of its current range $68-$70.25. 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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