WTI Crude Oil Futures: Sanctions Bite, Strong Draws Propel Prices Higher
WTI Crude Oil futures rallied on technical strength and mounting evidence that U.S. sanctions are biting into global supply
WTI Crude Oil Futures (February)
Yesterday’s Settlement: 74.25, up +0.69 [+0.94%]
WTI Crude Oil futures rallied yesterday on technical strength and further evidence that the actual enforcement of U.S. sanctions are biting into global supply. Reports have surfaced that Indian refiners are short up to 15 Russian Oil cargoes for January while Chinese ports have reportedly been instructed to avoid giving access and unloading of tankers sanctioned by the U.S. (Iran & Russia).
It was also reported yesterday that there is a log-jam of 18 tankers now waiting to load Mexican crude oil. Pemex shut their oil platforms Monday amid bad weather conditions.
U.S. Census data showed that November exports of crude oil were 4.334mln bpd – up +14% MoM and +9.2% YoY. 4.217mln bpd of exports were of U.S. origin crude while 118k bpd were re-exports of foreign oil.
Today, futures are up +0.49 [+0.66%] to 74.74
The macro environment is trading risk-off while Dollar strength is considerable. The British Pound and Euro are much weaker while the Yen is marginally weaker. The Chinese Yuan is also showing outsized weakness. Equities are off the lows of the day but following through to the downside after yesterday’s -1% move lower. Bond yields spiked in the early morning but are moving off the highs.
The main driver of today’s early morning trade is a CNN article headlined “Trump is considering a national economic emergency declaration to allow for new tariff program, sources say”. Traders should keep their head on a swivel in regards to the early morning reaction from this article – another Trump response refuting the story could be in-bound.
Last night’s API Report is helping to drive crude in today’s session, as the group reported strong draws. API figures are as follows [thousand bbls]:
Crude: -4,000
Gasoline: +7,300
Distillates: +3,200
Estimates for today’s EIA report are as follows [thousand bbls]:
Crude: -2,000
Gasoline: +500
Distillates: +500
Refinery Utilization: -0.50%
Technical Analysis
Yesterday’s session low was made around 2:30am at 73.11, right near Thursday’s settlement price (73.13). Futures rallied into, and through the U.S. open with decent buying volume at the open. Price tested 74.45 on the upside into the Europe close which was met with heavy selling that drove futures back towards levels seen at the U.S. open (made lows around 73.82 level).
The overnight / early morning trade today has featured stronger prices, with buying starting right at the 7pm open. Price made a high of 75.29 around 3am before selling off towards our pivot and point of balance around 74.32. The CNN article released about Trump tariffs have been driving markets this morning.
For today’s session, our intraday pivot and point of balance is set at…
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