WTI Crude Oil Futures (March)

Yesterday’s Settlement: 72.70, down -0.46 [-0.63%]

WTI Crude Oil futures started the day sharply lower, falling as much as -2.49 to a low of 70.67. Mid-morning, Trump signed a memorandum instructing the Treasury Department to ramp up economic pressures on Iran.

The headline rallied crude markets 2.68 higher, making a session high of 73.35 before leveling out to settle around 72.70.

There was no shortage of headlines yesterday as markets continued to wade through a barrage of executive orders and Trump commentary.

Today, futures are lower by -0.76 [-1.05%] to 71.96

The macro environment is trading mixed this morning. The Dollar, equities, and crude oil are all lower while precious metals are strongly higher. Gold is breaking out to the upside and showing notable strength. Dollar weakness should help buoy crude. Bonds are also showing notable strength this morning.

Trade tensions with China heated up last night as they threatened “anti-trust” probes against Apple. The reopening of Chinese markets after their New Year’s holiday brought with it little action.

Trump referenced the United States “taking over” the Gaza territory at a press conference with Netanyahu yesterday. This triggered a sharp reaction from Saudi Arabia and will likely bring strong pushback from our allies in the Gulf. If this is an actual plan, it is something to pay attention to closely.

Last night’s API report helped to pressure the overnight session, while the reopening of Chinese markets after their Lunar New Year holiday provided some support. Last night’s API report was as follows [thousand bbls]:

Crude Oil: +5,000
Gasoline: +5,400
Distillates: -7,000

Estimates for today’s EIA report are as follows [thousand bbls]:

Crude Oil: +2,000
Gasoline: -880
Distillates: -2,138
Refinery Utilization: -0.60%

Technical Analysis:

Price action in crude oil will continue to be whipsawed by headlines, but yesterday’s settlement above our rare, four-star support level of 71.25-71.63**** should slow the downside momentum we’ve seen since mid-January.

A settlement today above the rare 71.25-71.63**** is our key factor for today. If price can stabilize above this support zone, a choppy trade is anticipated. But, again, these markets are being driven by headlines that can create sizeable moves. Risk management and selectivity in trading remains a key.

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