The January WTI (CLF25) trading session settled at 68.10 (+0.10) [+0.15%], a high of 69.11, a low of 67.71. Cash price is at 68.02 (-0.76), while open interest for CLF25 is at 331,100. CLF25 settled below its 5 day (68.51), below its 20 day (69.33), below its 50 day (69.84), below its 100 day (70.92), below its 200 day (73.48) and below its year-to-date (73.20) moving averages. 

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OPEC Plus’s meeting has been pushed to this Thursday December 5th, it is expected that the group will extend their current output cuts. Traders will be awaiting news on whether or not the conglomerate will again delay their planned output increase, which is currently set to begin in January of next year, with a 180,000 barrel per day increase until ultimately 2.2 million barrels are revived by the end of next year. According to Bloomberg, “delegates from OPEC+ have begun discussions to delay the oil production restart planned for January”. Libya’s National Oil Corporation said the country's crude production has set a new high, producing 1.37 million barrels of crude per day.

Over the weekend Ukraine’s President Zelensky said he would be open to reaching a truce with Russia, while mentioning he would be open to conceding territory to Russia. This marks the first time in the two-year war that he has made such comments.

China’s November manufacturing PMI was positive, in my opinion, rising by +0.2 to 50.3, which beat expectations. China’s tax rebates on oil related exports dropped to 9% yesterday. China is set to hold the annual Central Economic Work Conference on December 11-12, where I expect further stimulus packages will be announced. China's stock market rallied strongly last week, today China’s Shanghai CSI 300 Index closed +0.79% higher

America’s Manufacturing PMI for November increased, registering at 48.4%, a +1.9 percentage point gain over October’s figure. Eurozone’s Manufacturing PMI hit a two-month low of 45.2 in November.

The “permanent” ceasefire deal between Israel and Lebanon is being tested, as both Hezbollah and Israel attacked one another this morning. Israeli Prime Minister Netanyahu stated in response “Hezbollah's Firing at Mount Dov constitutes a serious violation of the ceasefire, and Israel will respond forcefully”. Lebanon's state security said the ongoing activity is a “flagrant violation” of the ceasefire agreement. President Trump pronounced on Truth Social that if the Israeli hostages held by Hamas were not released by the time he assumes office that there would be quote “ALL HELL TO PAY in the Middle East”. In Syria, the over thirteen-year ongoing Syrian Civil War has intensified, with Syrian rebels seizing Aleppo, the largest city in the country. 

This past Saturday President-elect Trump threatened the BRIC nations (Brazil, Russia, India, China, and South Africa) that if they continued to plan to move away from the Dollar that he would impose 100% tariffs on said countries. The U.S. Dollar Index closed higher by +0.62% today.

Price Thoughts - Crude seems for now to be content trading in the middle of its current range. Personally I would be looking to buy any price breaks under $66 at the moment. Settling below $67 this week could see a further price break towards the next support line around $65 flat, which has been a major support line over the last few years. To the upside ~$70.25 is still the short term resistance with mid ~$72 (which were tested last week and this morning) after that. In the short term I would expect higher volatility with the current geopolitical tensions, but there's still a weight on prices via the demand situation. 

Now that Donald Trump has been elected President, I believe he’ll fulfill his promise to “Drill baby, drill”, significantly increasing the output capacity for American energy, passing executive orders as soon as day one in office. Keep in mind that the U.S. currently produces 13.5 million barrels of oil per day, a figure that's nearly 30% higher than it was just four years ago. Over the past 50 years, U.S. energy production has grown at a faster rate than consumption, and since 2019, America has been a net energy exporter. We shall see where that “million barrels per day” number goes after Trump is sworn in. Drastically increasing American energy output could create an interesting market share conflict with the OPEC+ nations, but that's another story, potentially down the line. Then there’s China, how much stimulus they choose to add to bolster their economy could determine crude prices significantly in the short and long term, I believe, and we’ll have to wait and see the impact Trump’s tariffs have. And then there’s the Middle East situation, which could simmer or explode, and even if the violence ends I believe we’ll see new economic sanctions on Iran. With the prevailing themes of a stronger dollar, potential trade wars, increasing supply, slowing economies and a lack of global demand front running price sentiment, it leads me to believe in 2025 crude oil prices will not end up averaging in the $85-$95 range, rather I see crude prices trading in the low $60’s to middle $70’s range, for long as there’s no black swan events.

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Jim Rinaudo

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