WTI Crude Oil Futures (February)

Yesterday’s Settlement: 73.92, up +0.60 [+0.82%]

WTI Crude Oil futures settled higher yesterday, driven by a bullish EIA report on Wednesday, the U.S. cold shot, and fears over further sanctioning of Russian & Iranian barrels.

Today, futures are sharply higher by +2.56 [+3.45%] to 76.49

The cold spell, sanctions, and geopolitical risk are driving futures sharply higher today. The risk of a Texas freeze is growing as more cold shots are scheduled to come across the U.S. in the following weeks (after this initial cold-shot).

There is a report this morning that the Biden administration is readying more sanctions against Russia that will specifically target their Crude industry.

Crude prices are trying to make new local highs not seen since October 8th, our bullish bias has been underpinned by the low levels of global inventories and geopolitical / trade-risk continuing to cause problems. Our view was that these factors were not correctly priced into the market, as the consensus narrative was too focused on the “2025 Oil Supply Glut” story. The “2025 Oil Supply Glut” narrative gets harder and harder to trade, publish, and sell when you are in 2025, and supply levels are at historical lows – also known as the exact opposite of a glut. Traders clinging to this thesis are likely growing impatient, and there is potential that the consensus narrative flips bullish.

Technical Analysis

Our key level to watch yesterday was a settlement above 73.84, which was achieved. This morning, the sharp spike tore through our major three-star resistance zone of 74.99-75.35*.

We were anticipating much heavier sell-side volume and resistance at this zone, and the velocity and magnitude of today’s early morning move is surprising. We would advise caution against chasing today’s move higher and would wait for further confirmation.

Bullish headlines and catalysts are abound today for crude markets. Price is currently trading at our major 76.41*** level. This level is significant, as it is the local high made on October 8th. Above this level, represents we’re looking at a retest of…

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