Recap: The oil market traded higher ahead of the close on Wednesday after officials said the U.S. seized an oil tanker off the coast of Venezuela. The market, which traded to $58.67 early in the morning before it erased some of those gains and sold off to a low of $57.66 in light of a 1.8 million barrel draw in crude stocks in the week ending December 5th. The crude market later bounced off its low and settled in a sideways trading range as the market awaited a decision by the Federal Reserve on U.S. interest rates. The market later traded mostly sideways in light of the expected 25 basis point interest rate cut. The January WTI contract settled up 21 cents at $58.46. The market was further supported in the post settlement period and rallied to a high of $59.05 in light of the news of the oil tanker seizure off the coast of Venezuela by the U.S. The February Brent contract settled up 27 cents at $62.21. The product markets ended the session in mixed territory, with the heating oil market settling up 1.29 cents at $2.2730 and the RB market settling down 82 points at $1.7815.
Technical Analysis: The crude market on Thursday will remain focused on the news of the oil tanker seizure in Venezuela, which adds to the prompt supply concerns. It will have to be seen if this is followed by any further actions against Venezuela in light of the U.S. military stationed in the Caribbean. The market will also look to any news regarding a possible peace agreement to end the war in Ukraine. The oil market is seen finding resistance at $59.05, $59.17, $60.30, $60.50, $60.70, $60.85, $61.01, $61.18, $61.60 and $61.84. Support is seen at $57.66, $57.10, $56.33 and $55.99.
Fundamental News: Three officials said the U.S. seized an oil tanker off the coast of Venezuela on Wednesday. The officials, speaking on the condition of anonymity, said the operation was led by the U.S. Coast Guard. They did not name the tanker, which country’s flag it was flying or exactly where the interdiction took place.
Bloomberg is reporting with that with spot Russian crude oil being offered at deep discounts into the Indian market, at least four of the seven largest oil refiners in the country appear to be active in acquiring Russian barrels recently. Prices for these barrels reportedly are being traded between $40 and $45 per barrel. The largest buyer of Russian crude oil until recently, Reliance Industries Ltd though has been reluctant to be active in the spot market for Russian barrels over concerns of running afoul of current U.S. or European sanctions. In fact Reliance reportedly has even reduced its current imports of Russian crude oil under its 500,000 b/d term contract with Rosneft PJSC. Ship tracking service Kpler is estimating that Indian imports of Russian crude oil in December could average 1.0-1.2 million b/d, down from the over 2 million b/d imported back in June.
British Prime Minister Keir Starmer’s office said leaders of Britain, France and Germany discussed with U.S. President Donald Trump ongoing U.S.-led peace talks for Ukraine, welcoming efforts to secure a just and lasting settlement. The leaders agreed this was a critical moment for Ukraine and said intensive work on the peace plan would continue in the coming days. Two European Union diplomats said European leaders including French President Emmanuel Macron and British Prime Minister Keir Starmer are set to convene in Berlin on Monday to discuss the situation in Ukraine. The diplomats said at least a dozen leaders, all allies of Ukraine, are expected.
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 in the week ending December 19th.
Early Market Call – as of 8:35 AM EDT
WTI – Jan $57.73, down $1.23
RBOB – Jan $1.7684, down 2.57 cents
HO – Jan $2.2375, down 4.54 cents
