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Oil Futures Weigh Economic Uncertainty
The June WTI (CLM25) contract settled at 62.05 (-0.97) [-1.54%], high of 63.92, low of 61.48. Spot price is 63.04 (+0.24). Open interest for CLM25 is 295,096. CLM25 settled below its 5 day (62.73), below its 20 day (63.33), below its 50 day (66.19), below its 100 day (68.37), below its 200 day (68.97) and below its year-to date (68.35) moving averages. The June Brent Crude (QAM25) contract settled at 65.86 (-1.01) [-1.51%], high of 67.53, low of 65.25. Spot Brent price is 66.90 (+0.34). QAM25 settled below its 5 day (66.53), below its 20 day (67.14), below its 50 day (69.89), below its 100 day (71.99), below its 200 day (72.93) and below its year-to-date (71.98) moving averages. The Commitment of Traders (COT) report (Net Futures and Options Summary) as of 4/22/25 showed Commercials with a net short position of -206,317 (a increase in short positions by 17,543 from the previous week) and Non-Commercials who are net long +198,969 (a increase in long positions by 22,767 from the previous week) This morning China's leading economic officials stated that the country could manage without American farm and energy imports. Zhao Chenxin, vice chairman of the National Development and Reform Commission, said that domestic production of energy, along with imports from non-US sources, would be sufficient to meet demand. Zhao noted there would be limited impact on China’s energy supplies if companies stopped importing American oil, natural gas and coal. Last week, White House officials indicated that tariffs on China could be reduced to between 50% and 65%, though no specific timeline was provided. This comes during a sparked debate between the two sides over whether formal trade negotiations have begun between the Trump and Xi administrations. Reuters reported that China’s refineries processed the highest volume of oil in a year in March, yet the amount of crude being added to inventories surged to its highest level in nearly three-years. China’s surplus crude reached 1.74 million bdp in March, the largest since June 2023, based on Reuters calculations from official data. Refiners processed 14.85 million bpd in March, according to data released on April 16, a 0.4% increase compared to the same month in 2024. Crude imports totaled 12.11 million bpd in March, up 5% from the same period last year, and the highest since August 2023. China’s domestic production also saw a strong rise, up 3.5% to 4.48 million bpd, the most since at least mid-2011, according to Reuters records. Imports from Iran were estimated by commodity analysts at Kpler to be 1.71 million bpd in March, a 20% increase from February’s 1.43 million bpd, and the highest level in five-months. Reuters reported that several OPEC+ members are expected to propose an increase in oil production for June, according to sources familiar with the matter. The group of eight OPEC+ countries is scheduled to meet on May 5 to finalize their output plan for June. These eight OPEC+ members previously agreed to raise oil production by 411,000 barrels per day starting in May. The US Energy Administration Administration report for the week ending April 18, 2025 showed an inventory build of +244,000 barrels, a large divergence from the API’s estimate of a -4.564 million barrel draw. Gasoline stocks had a draw of -4.5 million barrels, while daily production increased to an average of 10.1 million barrels. Distillates had a draw of -2.4 million barrels, while production averaged 4.6 million bpd. The Cushing, Oklahoma hub had a draw of -86,000 barrels, less than the API estimate of a draw of -354,000 barrels. The April 25th Baker Hughes Rig Count showed US oil rigs increased by 2, to a total of 484 oil rigs, 28 rigs lower than this time last year. Price Thoughts - Oil prices have also come under pressure from the OPEC rumor that members will propose reducing their output cuts in June, and possible sanctions on Iran coming offline in the near-term in pursuit of a US-Iran nuclear deal. Crude has been heavily influenced by the broader US indices movement and tariff headlines over the last two weeks, which in my opinion is here to stay until some stability becomes priced in. Crude futures may continue to trade in their near-term range of $59-$63 for WTI and $67-$61 for Brent until positive headlines generate, as the tighter supply/demand situation has taken a backseat to the macroeconomic picture. Technically short-term resistance is $63 and the $59 handle is supportive in the front months for WTI, while Brent has traded in a range of $67 and $61. Above that $63 resistance for WTI - $65 looks to be the next hurdle to clear, and for Brent above $67 would be that round figure $70. As I always say, this market is currently heavily influenced by the headlines first and foremost, and the weekly US EIA reports to a lesser degree. If you would like to receive more information on the commodity markets, please use the link to join our email list Sign Up Now You can reach me at - JRinaudo@walshtrading.com Follow Walsh Trading on X - @Walsh_trading Jim Rinaudo 312-957-4731 Walsh Trading 311 S Wacker Suite 540 Chicago, IL 60606 Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and is not suitable for all investors. 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