Recap: The oil market, which posted an inside trading day on Monday, retraced Friday’s sharp losses amid geopolitical tension in the Middle East, with Saudi airstrikes in Yemen causing concerns over potential supply disruptions and Russian claims that Ukraine launched a drone attack on a Russian presidential residence. Following a meeting between Ukraine’s President Volodymyr Zelenskiy and U.S. President Donald Trump on Sunday, Russia said it was reviewing its position in peace talks as it claimed that Ukraine attacked the Russian presidential residence in northern Russia. The crude market posted a low of $56.91 on the opening but gradually traded higher to $58.30 by mid-day. The market later erased some of its gains and settled in a sideways trading range during the remainder of the session. The February WTI contract settled up $1.34 at $58.08 and the February Brent contract settled up $1.30 at $61.94. The product markets ended the session higher, with the heating oil market settled up 2.05 cents at $2.1275 and the RB market settled up 1.81 cents at $1.7152.
Technical Analysis: The crude market will remain driven by the latest headlines following the meeting between Ukraine and the U.S. and Russian accusations against Ukraine. It will have to be seen whether Russia’s accusations against Ukraine will deflect any progress that was possibly made during Sunday’s meeting between Ukraine’s President and President Donald Trump. The oil market is seen finding resistance at $58.30, $58.88, $58.93, $60.01, $60.12, $60.45 and $60.60. Meanwhile, support is seen at $56.91, $56.65, $56.60, $56.41, $55.61, $55.08 and $54.89.
Fundamental News: Russia and Ukraine on Monday remained far apart on territorial issues that are blocking a peace deal. The Kremlin said Russia’s President Vladimir Putin told U.S. President Donald Trump on Monday that Russia would review its position in peace negotiations after what Moscow said was a Ukrainian drone attack on a Russian presidential residence. Ukraine has dismissed Russia’s accusation that 91 drones attacked Putin’s residence in northern Russia as a lie, and has accused Moscow of attempting to undermine peace talks. Earlier on Monday, Ukraine’s President, Volodymyr Zelenskiy, said that a 20-point peace plan to end Russia’s war should be put to a referendum in Ukraine. He said that a ceasefire of at least 60 days would be necessary to hold such a referendum. He also stated that a draft peace framework to end Russia’s war envisages U.S. security guarantees for Ukraine for 15 years. Ukrainian President Volodymyr Zelenskiy said that a meeting with Russia would be possible only after U.S. President Donald Trump and European leaders agree on a Ukraine-proposed peace framework to end Moscow’s war. On Sunday, U.S. President Donald Trump said that he and Ukrainian President Volodymyr Zelenskiy were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine, though both leaders acknowledged that some details, such as the future of Donbas, remain unresolved. President Trump said it will be clear “in a few weeks” whether negotiations to end the war will succeed. He said they were 95% of the way to such an agreement, and that he expected European countries to “take over a big part” of that effort with U.S. backing. Meanwhile, Ukrainian President Zelenskiy said an agreement on security guarantees for Ukraine has been reached. Ukraine’s President said he and U.S. President Donald Trump made significant progress in talks and agreed that U.S. and Ukrainian teams would meet next week to finalize issues aimed at ending Russia’s war in Ukraine. Just before Ukraine’s President and his delegation arrived at President Trump’s Florida residence, President Trump and Russian President Vladimir Putin spoke in a call described as “productive” by the U.S. president and “friendly” by Kremlin foreign policy aide Yuri Ushakov.
IIR Energy reported that U.S. oil refiners are expected to shut in about 192,000 bpd of capacity in the week ending January 2nd, cutting available refining capacity by 47,000 bpd. Offline capacity is expected to increase to 625,000 in the week ending January 9th.
Early Market Call – as of 8:30 AM EDT
WTI – Feb $58.36, up 53 cents
RBOB – Jan $1.7172, up 1.02 cents
HO – Jan $2.1525, up 2.28 cents
