Oil Follows Broader Market Sell Off
The May WTI (CLK25) contract settled at 69.36 (-0.56) [-0.80%], high of 70.09, low of 68.87. Spot price is 69.90 (+0.25), open interest for CLK25 is 330,240. CLK25 settled below its 5 day (69.41), above its 20 day (67.55), below its 50 day (69.97), below its 100 day (69.72), below its 200 day (70.48) and below its year-to date (70.50) moving averages.
The June Brent Crude (QAM25) contract settled at 72.76 (-0.58) [-0.79%], high of 73.45, low of 72.28. Spot Brent price is 74.03 (+0.22). QAM25 settled below its 5 day (72.78), at its 20 day (70.76), below its 50 day (73.10), below its 100 day (72.99), below its 200 day (74.22) and below its year-to-date (73.60) moving averages.
Today’s COT report (Futures and Options Summary) as of 3/28/25 showed commercials with a net short position of -208,888 (a increase in short positions by 3,580 from the previous week) and non-commercials who are net long +197,061 (a increase in long positions by 10,853 from the previous week)
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Today’s Weekly Baker Hughes Rig Count showed U.S. oil rigs dropping by 2, to a total of 484 in the week ending March 28th. The 484 total is 22 less than this time last year. U.S. gas rigs increased by 1, tota total of 103. The 103 total is 9 rigs less than this time last year. In Canada oil rigs declined by 10, to a total of 108.
This week’s U.S. Energy Information Administration’s weekly petroleum status report showed commercial crude oil inventories with a draw of -3.3 million barrels last week (against a forecast of a -1.6 million barrel draw), to a total of 433.6 million barrels, inventories are about 5% below their five-year seasonal average. U.S. crude oil imports averaged 6.2 million barrels per day, an increase of +810,000 barrels per day from the previous week. U.S. oil refinery inputs averaged 15.8 million barrels per day, and +87,000 barrel per day increase, while refineries operated at 87% capacity. Total products supplied over the last four-week period averaged 20.2 million barrels per day. Total commercial petroleum inventories grew by 3.2 million barrels. The U.S. Strategic Petroleum Reserve increased from 395.9 million barrels to 396.1 million barrels.
Yesterday, a U.S. federal district judge issued a ruling blocking the Biden administration's sale of oil and gas drilling rights in the Gulf of America. The sale, mandated by Congress under the Inflation Reduction Act, had proposed to lease approximately 73.3 million available acres.
President Trump said that reciprocal tariffs could be lower than many expect, saying, “We’re going to make it all countries, and we’re going to make it very lenient.” He continued, “I think people are going to be very surprised. It’ll be, in many cases, less than the tariff that they’ve been charging us for decades.” However, later on his Truth Social platform, he commented, “If the European Union works with Canada in order to do economic harm to the USA, large-scale tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”
Both Russia and Ukraine said they have agreed to a U.S. backed ceasefire agreement, implementing the ‘Black Sea Initiative’ which aims to "ensure safe navigation, eliminate the use of force, and prevent the use of commercial vessels for military purposes in the Black Sea." About 2-3 million barrels per day of crude oil and oil products pass through the Black Sea. Despite reports of Russian attacks on Ukrainian infrastructure and vice versa over the past week, both Russian President Putin and President Zelenskyy agreed to a 30-day suspension of attacks last week.
President Trump said the U.S. would be imposing a 25% ‘Secondary’ tariff on Venezuela, and a 25% tariff on “any Country that purchases Oil and/or Gas from Venezuela” On Truth Social President Trump said the ‘Secondary’ tariff would take effect on Venezuela buyers on April 2nd. China, who already has a 20% tariff placed on them, is the biggest buyer of Venezuelan oil and is estimated to be importing about 500,000 barrels per day of crude oil and fuel from Venezuela. Additionally, the Trump administration revealed that it would extend a license for Chevron until May 27th. This license, which was originally set to expire on April 3rd, permits the multinational energy corporation to operate and export crude oil from Venezuela, which Chevron has been doing since November of 2022 Last year an average of 220,000 barrels per day were imported into the U.S. out of Venezuela, representing about 3.5% of all U.S. crude imports. Reuters reported that Chevron exported roughly 300,000 b/d from Venezuela to the U.S. this past January, a five-year high.
China’s National Bureau of Statistics said China’s industrial profits decreased by 0.3% for the first two months of 2025, this comes after a 11% earnings increase for December ‘24. Profits at state-owned firms grew 2.1% over the January-February period. President Trump told reporters that “maybe I’d give them a reduction in tariffs”, referring to China, if China agreed to sell TikTok to an American company. China's Shanghai 300 Index sits at 3,915.17 down -0.44%.
OPEC+ 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.
The Dow, S&P and Nasdaq all suffered steep sell offs, as market participants await next Wednesday’s reciprocal tariff announcements and took in the latest PCE data. The Core Personal Consumption Expenditures Price Index showed a hotter-than-expected +0.4% increase for the month, which was the biggest monthly gain since January 2024, and could signal to the Fed that inflation is not as under control as previously thought. The Dollar Index is trading at 104.01 (-0.31%) as of this post.
Price Thoughts - Bit of a broad market breakdown today as equities tanked, with oil following along and gold prices setting new all time highs. Headline wise it was on the quieter side as well, of note to me was the news that the IDF bombed Hezbollah targets in Beirut and more talk that China has continued to reduce buying from sanctioned Russian oil tankers. Both Brent and WTI flipped back to trading below their 100 day moving average after clearing the mark yesterday, slowly both Brent and WTI’s 200 day and year-to-date moving averages inch closer. That $70 price/eye barrier WTI faces has had a tough time being able to stay above, at the moment I think we could trade back down to low $67 next week with bearish momentum on purely a technical level. Wednesday's tariff announcements, more so than the technicals or supply/demand numbers, I believe will dictate the markets next week. Specifically I will be anxious to see what happens with Canadian tariffs and Canada's reaction.
I think there’s a balancing act going on right now, between the supply/demand picture, the possibility of Russian sanctions being taken off sooner rather than later, increased Venezuelan and Iranian sanctions, OPEC+ increasing production in April, tariff speculation, the Israel-Hamas-Hezbollah-Houthis situation, and the economic health of the U.S. and China. I believe we’ll continue to headline trade on a - week to week - daily basis - until things become more clear.
WTI Crude oil has broken above its $67 long-term support line, while Brent has sustained above its $70.00 level. $65 has been a major support figure since 2021, and with the settlements over the past week I believe we have set a new short-term support at the $67 handle. To the upside, there’s resistance in the upper $69 region into $70 handle, 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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