Recap: The crude market on Wednesday posted an inside trading day as it failed to find momentum in either direction as the market weighed builds in U.S. oil inventories against the news that U.S. and Russian officials failed to reach a compromise on a potential Ukraine peace deal. The oil market posted a low of $58.37 in overnight trading amid an unexpected build in crude stocks of over 2.4 million barrels reported by the API late Tuesday. The market, which held support at its previous low, rallied higher on news that there was no breakthrough in the peace talks to end the war in Ukraine. The crude market traded to a high of $59.64 by mid-morning. However, the market erased some of its gains after the EIA also reported builds across the board. The January WTI contract settled up 31 cents at $58.95 and the February Brent contract settled up 22 cents at $62.67. The product market settled in negative territory in light of the builds in distillates and gasoline stocks, with the heating oil market settling down 1.19 cents at $2.3008 and the RB market settling down 31 points at $1.8272.
Technical Analysis: The oil market will likely continue to trade sideways as the market weighs the geopolitical concerns of the failure to reach a compromise to end the war in Ukraine and the recent Ukrainian attacks on Russia’s oil infrastructure against the builds in the U.S. oil inventories that added to fears of an oversupply in the market. The crude market is seen finding support at $58.37, $58.28, $57.66, $57.10, $56.33 and $55.99. Meanwhile, resistance is seen at $59.64, $59.67, $59.97, $60.03, $60.24, followed by $60.70, $60.85, $61.01, $61.18, $61.60 and $61.84.
Fundamental News: The EIA reported that U.S. crude and fuel inventories built last week as refining activity increased. Crude inventories increased by 574,000 barrels to 427.5 million barrels in the week ended November 28th. Refinery crude runs increased by 433,000 bpd in the week, while refinery utilization rates increased by 1.8 percentage points in the week to 94.1%. U.S. East Coast refining utilization increased to the highest level since January 2023, while U.S. Gulf Coast refining utilization rate increased to the highest level since June 2023. Net U.S. crude imports fell 470,000 bpd to 2.37 million bpd. U.S. crude oil imports from Mexico fell by 431,000 bpd to a weekly record low of 131,000 bpd in the week ended November 28th.
On Wednesday, a White House official said U.S. envoys Steve Witkoff and Jared Kushner briefed President Donald Trump and Ukrainian officials after a “thorough, productive meeting” with Russian President Vladimir Putin in Moscow on Tuesday. Meanwhile, the Kremlin said that Russian President Vladimir Putin had accepted some U.S. proposals to end the war in Ukraine and rejected others and that Russia was ready to meet U.S. negotiators as many times as it took to reach an agreement.
Ukrainian President Volodymyr Zelenskiy said senior Ukrainian negotiator Rustem Umerov will hold talks in Brussels on Wednesday with European leaders’ national security advisers and then visit the United States.
IIR Energy said U.S. oil refiners are expected to shut in about 54,000 bpd of capacity in the week ending December 5th, increasing available refining capacity by 133,000 bpd. Offline capacity is expected to remain unchanged at 54,000 in the week ending December 12th.
UBS expects crude oil prices to start recovering in the second quarter of 2026. It said its base case forecast Brent crude trading at around $65/barrel in mid-2026 and $67/barrel at the end of 2026. It forecast WTI crude trading at a $3/barrel discount to Brent crude.
The Financial Times reported that Trafigura forecast China’s oil demand will fall to a multi-year low in 2026. It said Trafigura’s chief economist Saad Rahim said India’s oil consumption will grow more quickly than China’s for the first time next year.
Early Market Call – as of 8:30 AM EDT
WTI – Jan $59.36, up 25 cents
RBOB – Jan $1.8339, up 60 points
HO – Jan $2.2968, down 21 points
