Yesterday’s Settlement: 68.70, up +0.27 [+0.39%]

WTI Crude Oil futures settled marginally higher yesterday after a disappointing U.S. trading session. After a hotter than expected U.S. PPI figure at 7:30am cst, dollar strength once again came through. USD swap markets are now pricing in a 41.8% probability of a 25bps cut at the December meeting, that probability opened yesterday at 67%. 

The reality of a higher for longer interest rate environment is starting to firmly take hold. This sentiment continues to pressure crude prices.    

Yesterday’s EIA report printed considerably bullish demand side figures. Demand for refined products both domestic and exported continues to be strong and is driving refinery utilization rates to higher than normal seasonal levels. Figures are as follows [thousand bbls]:

• Crude: +2,089k [+1,600 estimate]
• Gasoline: -4,407 [+1,000 estimate]
• Distillates: -1,394 [+1,266 estimate]
• Refinery Utilization: +0.90% [+0.70% estimate]

Heading into the U.S. session the dollar index is lower by -0.09% – driven by a strong Yen [+0.62%] and Chinese Yuan [+0.21%]. WTI futures are lower by -0.47 to 68.22.    

Overnight, the Chinese finance ministry announced they would be removing export tax incentives for their Aluminum producers, driving aluminum prices up 5%. The move appears to be in preparation for trade negotiations with Trump. The metals sector is the leader in the commodity clubhouse to start the U.S. session here which may bode well for crude pricing.

{Two-Day tick chart}  

Yesterday’s price action was disappointing for the bulls, as price failed quickly at our rare four-star resistance level of 69.32-69.74. On the bright side, we are getting a defined range between our levels..

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