Recap: The oil market posted an inside trading day and settled lower as the market weighed the continuing talks towards a potential Russia-Ukraine peace deal against the U.S.’ pressure campaign against Venezuela’s leader Nicolas Maduro. In overnight trading, the crude market continued Thursday afternoon’s retracement of its earlier losses and posted a high of $58.19 following the news that the U.S. imposed sanctions on six companies shipping Venezuela’s oil following the seizure of a tanker on Wednesday and reports stating that the U.S. was preparing to intercept more ships transporting Venezuelan oil. However, the market later erased some of its gains and posted a low of $57.15 by mid-morning as the market also focused on a potential Russia-Ukraine peace agreement. U.S. President Donald Trump said the United States would send a representative to participate in talks in Europe on Ukraine this weekend if there is a good chance of making progress on a ceasefire deal. The market later settled in a sideways trading range during the remainder of the session. The January WTI contract settled down 16 cents at $57.44 and the February Brent contract settled down 16 cents at $61.12. The product markets ended the session lower, with the heating oil market settling down 3.09 cents at $2.1980 and the RB market settling down 77 points at $1.7521.
Technical Analysis: The crude market will look to any headlines regarding any movement on a possible peace agreement between Russia and Ukraine, with Ukraine holding talks with leaders of Britain, France and Germany in Berlin on Monday. The market will also look for any further developments the U.S. pressure campaign on Venezuela. The oil market is seen finding support at $57.15, $57.01, $56.33 and $55.99. Meanwhile, resistance is seen at $58.19, $58.34, $58.75, $58.94, $59.05, $59.17 followed by $60.30 and $60.50.
Fundamental News: U.S. President Donald Trump said the U.S. will soon begin strikes to stop narcotics shipments from making their way from Venezuela to the United States via land routes. President Trump has repeatedly threatened to begin strikes on narcotics being smuggled over land in recent weeks.
Bloomberg is estimating that about 300,000 bpd, or 30% of Venezuela’s oil exports are potentially at risk if the U.S. strictly enforces sanctions. Meanwhile recent Ukrainian drone attacks on Russian oil tankers in the Black Sea could potentially threaten as much as 700,000 bpd or 20% of Russian seaborne flows.
On Thursday, U.S. President Donald Trump said the United States will send a representative to participate in talks in Europe on Ukraine this weekend if there’s a good chance of making progress on a ceasefire deal.
German newspaper Bild reported that Ukrainian President Volodymyr Zelenskiy will visit Berlin on Monday to meet Chancellor Friedrich Merz and also speak with representatives of Britain and France. The format of the talks and whether U.S. officials would be present or take part remotely was not immediately clear.
Baker Hughes reported that U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second time in three weeks. The oil and gas rig count fell by one to 548 in the week ending December 12th, the lowest since November 26th. Baker Hughes said oil rigs increased by one to 414 this week, their highest level since November 21st, while gas rigs fell by two to 127.
IIR Energy said U.S. oil refiners are expected to shut in about 241,000 bpd of capacity in the week ending December 12th, cutting available refining capacity by 27,000 bpd. Offline capacity is expected to fall to 186,000 bpd in the week ending December 19th.
Early Market Call – as of 8:55 AM EDT
WTI – Jan $57.06, down 47 cents
RBOB – Jan $1.7431, down 1.04 cents
HO – Jan $2.1930, down 1.16 cents
