Recap: The crude market sold off on Thursday as the market reversed its gains posted on Wednesday after U.S. President Donald Trump ruled out the use of force to acquire Greenland and stepped back from tariff threats aimed at the United States’ European allies. On Wednesday, President Trump also softened his threats against Iran, stating that he hoped there would be no further U.S. military action in Iran but added that the U.S. would act if Iran resumed its nuclear program. The oil market traded to a high of $60.82 in overnight trading before it erased most of its previous gains. The market continued to trade lower and posted a low of $58.96 following the release of the EIA’s weekly petroleum stocks report, which showed builds across the board, with a larger than expected build of 3.6 million barrels in crude stocks. The market later settled in a sideways trading range during the remainder of the session. The March WTI contract settled down $1.26 at $59.36 and the March Brent contract settled down $1.18 at $64.06. The product markets ended the session lower, with the heating oil market settling down 6.37 cents at $2.3668 and the RB market settling down 4.02 cents at $1.8172.
Technical Analysis: The oil market on Friday will likely continue to trade in its recent trading range as some of the risk premium related to the U.S. seeking to acquire Greenland and Iranian supply risk has dissipated. The market will likely refocus on the supply and demand outlook. It will also look to further developments on a possible deal to end the war between Russia and Ukraine following U.S. President Donald Trump’s meeting with Ukraine’s President Volodymyr Zelenskiy on Thursday in Davos. The crude market is seen finding support at $58.96, $58.52, $58.32, $57.65, $57.48 followed by $55.89 and $55.65. Meanwhile, resistance is seen at $60.82, $60.89, $61.01 and $62.20.
Fundamental News: U.S. Energy Secretary, Chris Wright, said the world needs to more than double oil production, while criticizing the European Union and the U.S. state of California for wasting money on what he described as inefficient green energy.
Amin Nasser, Chief Executive of Aramco, said global oil glut predictions are seriously exaggerated as demand growth remains strong and global oil stocks are depleted.
Kazakhstan’s Energy Ministry said that a special commission was investigating the causes of a January 18th incident which forced the shutdown of the Tengiz oil field. Production at the field could be remain halted for another 7-10 days.
Sources stated that Valero bought a cargo of Venezuelan crude oil, one of the first deals by U.S. Gulf Coast refiners that are part of Washington’s agreement with Venezuela to export up to 50 million barrels. A source also stated that Phillips 66 has also purchased a cargo. Both bought the crude from trading house Vitol.
U.S. President Donald Trump said that his meeting with Ukrainian President Volodymyr Zelenskiy in Davos was “very good” and that his message to Russian President Vladimir Putin is that the war in Ukraine has to end. Separately, Ukrainian President, Volodymyr Zelenskiy, said he discussed progress on peace talks and air defense supplies at a “productive” meeting with his U.S. counterpart Donald Trump in Davos on Thursday.
The Kremlin said that it appreciated U.S. envoy Steve Witkoff’s diplomatic efforts to end the war in Ukraine, but declined to comment on the U.S. envoy’s stated optimism that a deal was close. Witkoff and Jared Kushner, U.S. President Donald Trump’s son-in-law, are due to meet Russian President Vladimir Putin in Moscow for talks on Ukraine later on Thursday.
Early Market Call – as of 8:50 AM EDT
WTI – Mar $60.88, up $1.21
RBOB – Feb $1.8449, up 1.92 cents
HO – Feb $2.4136, up 3.28 cents
