WTI Climbs on Geopolitical Tensions and Arctic Chill Risks

Energy Update

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WTI Crude Oil Futures (February)

Friday’s Settlement: 70.60, up +0.98 [+1.41%] for the day, up +1.14 [+1.64%] for the week  

Friday’s move higher was driven by geopolitical risk. Israel opened a new front in their conflict last week and started striking Houthi rebels in Yemen.     

The Houthi’s, who are aligned and funded by Iran, have been in regular conflict with Saudi Arabia over the past decade. Historically, the Houthi’s attack strategy has been to target the Kingdom’s oil & gas assets. Because of this, the market may add more risk-premia to this specific escalation than prior conflicts with Hamas or Lebanon’s Hezbollah. 

Today, futures are higher by +0.43 [+0.61%] to 71.03

Over the weekend, longer-range (two-week) weather maps started showing a blast of arctic air engulfing the United States. This “polar vortex”, scheduled to come about the middle of next week, will bring freezing temperatures not just into the midwest and Northeast, but also into Texas. 

The potential for freezing temperatures in Texas could halt oil & gas production which is helping drive oil prices higher alongside Natural Gas prices [+16.55%]. 

Markets are also preparing for Trump’s inauguration as he has already threatened tariffs on oil producers in Canada and Mexico while promising “maximum pressure” on Iran.

Technical Analysis

WTI Crude Oil futures on Friday while settling higher, failed to settle above Thursday’s high of 70.75 and made a high on Friday of exactly 70.75. Today, futures have ripped above that level on geopolitical risk, Trump risk, and risk of a “Texas freeze”. This morning, futures are already testing the highs of our key three-star resistance zone of 69.73-70.04.  This resistance zone has been a nuisance since mid-October, and we’ve had one settlement above this level since October 14th. A settlement above 71.21 would be significant, this is the key technical indicator to watch today. Our intraday pivot and point of balance is set at the Thursday & Friday highs of….

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy, and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third-party application. Blue Line Futures employees use only firm-authorized email addresses and phone numbers. If you are contacted by any person and want to confirm your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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