As last minute shoppers scramble to find that awe inspiring gift for that special someone on their “nice list”, Kris Kringle appears to deliver a tight $2 range bound market for crude bulls till the end of the year. As of 12pm EST, WTI for January delivery is up $0.25 at $57.41, HO is up $0.0067 at $1.9319, and RBOB is up $0.0162 at $1.6887. For a month and a half WTI crude has been stuck in a range of around $56.00 - $58.00.
With the Forties pipeline being down until potentially the end of January, Saudis intercepting ballistic missiles fired towards the capital Riyadh by the Houthis, and Nigerian Oil union potentially resuming strikes mid-January, WTI is still having trouble finding traction to break-out to the upside. We look to the “naughty list” and the bears, for the range bound balance. U.S. shale production is expected to rise for a 13th consecutive month to a new record in January, U.S. production will reach levels of over 10 mbpd next year, and hedge funds are showing signs of exhaustion in oil. Even though hedge fund managers had boosted their bullish positions in Brent due to the shutdown of the Forties pipeline, net longs in WTI and gasoline were each cut by 8 million barrels. As prices are caught in this range, it is no surprise portfolio managers are unwilling to add to their near-record long positions. For now, we await APIs tonight and DOEs tomorrow. U.S. crude stocks seen down for a fifth week:
Crude -3.5 million
Distillate -1.3 million
Gasoline +2.2 million