Recap: The crude oil market sold off on Monday as the market weighed disruptions linked to increasing U.S-Venezuela tensions against the impact of a potential Russia-Ukraine peace deal. Venezuela’s oil exports have fallen sharply since the U.S. seized a tanker last week and imposed new sanctions on shipping companies and vessels conducting business with Venezuela. The oil market traded sideways in overnight trading and posted a high of $57.80. However, the market erased any gains and sold off to a low of $56.40 by mid-day. It traded mostly sideways during the remainder of the session as progress in U.S. peace talks to end the war in Ukraine kept the market under pressure. Officials meeting in Berlin said there was broad agreement on 90% of the issues between Ukraine and Russia. The January WTI contract settled down 62 cents at $56.82 and the February Brent contract settled down 56 cents at $60.56. The product markets ended the session lower, with the heating oil market settling down 1.74 cents at $2.1806 and the RB market settling down 1.98 cents at $1.7323.
Technical Analysis: The crude market will remain driven by the latest headlines, with the market weighing the escalating tensions between the U.S. and Venezuela and the possibility of a Russia-Ukraine peace agreement following the latest talks between the U.S., and Ukrainian negotiators in Germany on Monday. The crude market is seen finding support at $56.40, $56.33 and $55.99. Meanwhile, resistance is seen at $57.80, $57.97, $58.19, $58.45, $58.94, $59.05, $59.17 followed by $60.30 and $60.50.
Fundamental News: Ship monitoring data showed that a tanker carrying 300,000 barrels of Russian naphtha for Venezuelan state oil company PDVSA and at least four supertankers due to pick up crude cargoes in Venezuela have made u-turns after the U.S. seized a vessel carrying Venezuelan crude. The U.S. Coast Guard last week intercepted and seized a very large crude carrier carrying some 1.85 million barrels of Venezuelan heavy oil sold by PDVSA. The seizure left more than 11 million barrels stuck onboard other vessels in Venezuelan waters and has prompted some tanker owners to order u-turns to avoid problems, with an armada of U.S. ships patrolling the Caribbean Sea. At least four VLCCs that were in PDVSA’s schedules to load crude at Venezuelan ports in the coming weeks have also made u-turns in recent days.
U.S. officials said Ukraine could receive security guarantees modeled on NATO’s Article 5 mutual defense pledge under a proposed peace deal with Russia, an unprecedented offer aimed at ending the war sparked by Moscow’s 2022 invasion. The officials said there was broad agreement on 90% of the issues between Ukraine and Russia. But they acknowledged that territory and sovereignty would still have to be resolved by the parties themselves. Earlier, U.S. peace negotiators told Ukraine during peace talks in Berlin that it must agree to withdraw its forces from the eastern Donetsk region as part of any deal to end the nearly four-year-old war. Ukraine has said previously it would not cede territory to Russia. The talks in Berlin were led on the U.S. side by Trump envoys Steve Witkoff and Jared Kushner, the president’s son-in-law.
European leaders said they had agreed on Monday that any decisions on potential Ukrainian territorial concessions to Russia could only be made once strong security guarantees were in place which should include a European-led multinational force.
The U.S. Department of Transportation has declared a regional emergency for Delaware, New Jersey, New York and Pennsylvania due to cold weather and a power outage at a Pennsylvania gas refinery that disrupted the flow of propane. The declaration, made on Friday, allows carriers hauling propane, natural gas, and heating oil to bypass maximum driving time rules while providing direct assistance to the emergency.
Early Market Call – as of 8:55 AM EDT
WTI – Jan $56.64, down $1.04
RBOB – Jan $1.7050, down 2.22 cents
HO – Jan $2.1563, down 2.31 cents
