Recap: The oil market traded higher on Monday on increasing geopolitical risk with the U.S. intercepting an oil tanker in the international waters off the coast of Venezuela and tensions in Russia’s war against Ukraine remaining high. The U.S. Coast Guard pursued an oil tanker near Venezuela in what was the second such operation over the weekend and the third in less than two weeks. This followed U.S. President Donald Trump’s announcement last week of a “total and complete” blockade of sanctioned Venezuelan oil tankers. Also, while U.S. special envoy Steve Witkoff said that talks between U.S., European and Ukrainian officials in Florida over the weekend had focused on aligning positions and added that they had been productive, the top foreign policy aide of Russian President Vladimir Putin said that changes made by the Europeans and Ukraine to U.S. proposals had not improved prospects for peace. The market was also supported by reports of Ukrainian drone attacks on Russian ships at a Black Sea port. The oil market posted a low of $56.60 on the opening before it continued to trend higher. The market rallied to a high of $58.13 early in the morning. The market later retraced some of its gains and settled in a sideways trading range during the remainder of the session. The February WTI contract settled up $1.49 at $58.01 and the February Brent contract settled up $1.60 at $62.07. The product markets ended the session higher, with the heating oil market setting up 3.62 cents at $2.1581 and the RB market settling up 3.4 cents at $1.7422.
Technical Analysis: The crude market will continue to trade within its recent trading range as it remains headline driven. The market will remain well supported by the possible disruptions to Venezuelan and Russian oil supply amid the increasing geopolitical tension. The market is seen finding resistance at $58.13, $58.76, $58.83, $58.93, $60.01 and $60.12. Meanwhile, support is seen at $56.60, $55.61, $55.08, $54.89 and $54.71.
Fundamental News: The U.S. Coast Guard is pursuing an oil tanker in international waters near Venezuela in what would be the second such operation this weekend and the third in less than two weeks, if successful. British maritime risk management group Vanguard, along with a U.S. maritime security source, identified the vessel as Bella 1, a very large crude oil carrier that was added last year to the sanctions list of the U.S. Treasury Department, which said the vessel has links to Iran. According to TankerTrackers.com, Bella 1 was empty when it was approaching Venezuela on Sunday.
China’s Foreign Ministry said the United States’ seizure of another country’s ships was a serious violation of international law, after the U.S. intercepted a China-bound oil tanker off the Venezuelan coast. On Saturday, the U.S. Coast Guard intercepted a second oil tanker in international waters off the Venezuelan coast, days after President Donald Trump announced a “blockade” of all sanctioned oil tankers entering and leaving Venezuela. The tanker, Centuries, loaded in Venezuela under the false name “Crag” and was carrying some 1.8 million barrels of Venezuelan Merey crude oil bound for China.
According to tracking data and sources, tanker loading in Venezuela fell on Monday, with most ships moving oil cargoes only between domestic ports following U.S. action against two more ships and as state-run energy company PDVSA struggles to recover from a cyberattack. As of Monday, PDVSA had delivered a 1.9 million-barrel cargo of heavy crude to the Aruba-flagged sanctioned vessel Azure Voyager at the Jose port, but no other supertanker bound for Asia was scheduled to load soon. The number of loaded tankers that have not departed has increased in recent days, leaving millions of barrels of Venezuelan oil stuck in ships, while customers demand deeper discounts and contract changes to take risky voyages beyond the country’s waters.
On Sunday, U.S. special envoy Steve Witkoff said talks held between U.S., European and Ukrainian officials over the last three days in Florida aimed at ending Russia’s war in Ukraine were productive and focused on aligning positions.
Early Market Call -as of 7:15 AM EDT
WTI -Feb $58.07, up 12 cents
RBOB -Jan $1.7424, down 3 points
HO -Jan $2.1586, up 38 points
