Yesterday’s Close: Settled at 71.99, up +0.52 [+0.73%]
WTI Crude Oil futures started yesterday’s session strong, rallying to a high of 72.67 [+1.20] by 10:50 am CST. From there, futures sold off sharply, even briefly turning negative as traders braced for the election.
Trump’s decisive victory last night has resulted in significant volatility across asset classes. Dollar strength is significant, and is catalyzing a drag lower in commodities.
Crude oil is being dragged lower alongside the rest of the commodity. WTI futures are lower by -2.01 [-2.78%] to the 70.00 level.
There is some rhetoric out there that Trump will be easier on Russian oil sanctions which could lead to a bearish crude move. Readers should note that the incumbent administration has not, in reality, enforced either Russian or Iranian oil sanctions with much force. While this story may drive short-term trading flows within futures markets – physical markets may tell a different story in the coming days.
According to Amirita Sen of Energy Intelligence, the Biden administration “…hasn’t enforced any sanctions. In fact, it’s encouraged people to buy Iranian oil because that’s what keeps prices down. Just enforcing Iranian sanctions would be enough to take 1mln bpd off the market.”
Outside of politics, last night’s API report showed the following figures [thousand bbls]:
- Crude: +3,100
- Gasoline: -900
- Distillates: -900
- Cushing: +1,700
Analyst estimates for today’s EIA report are as follows [thousand bbls]
- Crude: +402
- Gasoline: -328
- Distillates: +113
Other headlines yesterday included the lowering of Saudi Arabia’s official selling price (OSP) to Asian buyers. The lowering of the OSP differential was largely expected but worth noting as it hints at continued weakness in Asian demand.
Two-day intraday price action is shown below:
WTI Crude Oil futures are testing previously established three-star support levels at 70.25-70.32 in a whiplash of election night volatility. Our pivot and point of balance has been shifted to 70.80. On a closing basis, we will be watching that 70.25-70.32 and rare four-star support in which we have detailed; a close below here will shift momentum to the bears. Upon a rally attempt, a close back above key resistance at…
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