WTI Crude Oil futures struggled at first key resistance yesterday

WTI Crude Oil (October)

Yesterday's close: Settled at 68.71, up 1.04

WTI rallied yesterday on technical buying and the increasing risk-premia as forecast Tropical Storm Francine was forecasted to strengthen as it hit the gulf. Francine is expected to make landfall as a category two hurricane Wednesday. The oil majors announced evacuations and some well shut-ins on their off-shore rigs yesterday on updated forecasts.

Sellers have been pressuring the market overnight into this morning on updated OPEC data and the preponderance of traders to sell any pops within the structural bear market. WTI is off -0.64 [-0.92%] to 68.07. RBOB is a bit stronger on weather risk, down -0.50 [-0.26%] to 191.55, and Diesel is off -1.52 [-0.71%]. European Diesel is showing strength, with Gasoil up +0.75 [+0.12%] to 646.50. Front month Natural Gas is stronger on Hurricane Francine risk-premia, with the October contract up +0.72 [+3.27%] to 2.241.   

OPEC released their Monthly Oil Market Report (MOMR) overnight. The group’s updated demand forecasts showed minor adjustments downwards but still showed over-optimistic (in our opinion) demand assumptions. This comes despite OPEC’s decision to delay Oil output hikes by two months. 

Whatever the reason may be, OPEC has been a habitual over-estimator of global oil demand for the past few years. Caution is advised on use of their demand side estimates. The group is forecasting oil demand growth of 1.7mln barrels per day for 2025 and 2.0mln barrels per day for 2024, both above the pre-pandemic long term average of 1.4mln barrels per day. Non-OECD demand is projected to drive 2025 demand growth, with 1.6 out of the 1.7mln bpd of growth coming from China, the Middle-East, Other Asia and India.

Contact Blue Line’s research desk for more information and color on the OPEC report if interested. 

Also slated for today is the release of the EIA’s Short Term Energy Outlook report and continued commentary out of the APPEC conference. 

Summary: With the fundamental and macroeconomic backdrop where it is, pops in Crude are likely to be sold. From an active trader's standpoint, we advise patience and selectivity if picking buy-spots as the market continues its downtrend. We have yet to settle into an established trading range on this leg lower and downside risk remains.

WTI Crude Oil futures struggled at first key resistance yesterday at....

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