Costs to Process More Domestic Oil: With the recent drops in oil prices from the $70.00 range to around $60.00, there has been quite a bit of dialogue regarding what does the WTI oil price need to be in order for it to be a profitable barrel. According to a Reuters article, U.S. refiners are not planning to make big-ticket investments to process more domestic crude and less oil from top suppliers like Canada and Mexico, which would be an obstacle to President Trump's plan to boost U.S. oil output. The U.S. produces mainly light shale crude, which ideally requires a different configuration at refineries than denser, heavier Canadian and Mexican crude. More than 70% of U.S. processing capacity is configured to run heavier grades, and changing the setup can be a lengthy, expensive process.
Venezuelan Oil: According to shipping data, many buyers of Venezuelan oil have resumed loading crude onto tankers after a week-long pause at the country's ports after the U.S. applied tariffs that President Trump imposed on importers of their oil. Some independent refiners temporarily halted purchases from Venezuela as they sought information on whether supply would remain available and at what price. China is Venezuela's largest oil buyer, purchasing around 480,000 bpd of crude and fuel this year. The U.S. is the No. 2 destination with 250,000 bpd, India is third with 63,000 bpd and Europe fourth with 44,000 bpd. Venezuela produced over 920,000 bpd of crude last year, according to figures reported to OPEC.
EIA Oil Stocks Review: The EIA reported U.S. crude oil stockpiles rose last week as imports increased and exports fell to their lowest since January, while gasoline and distillate inventories drew down. U.S. crude imports rose last week by 360,000 barrels per day to just under 3 million bpd, but more notably, U.S. oil exports fell 637,000 bpd to 3.2 million bpd. The U.S. normally exports about 4 million bpd. With exports falling, questions will likely arise if the U.S. will lose access to the China market, and whether we will see a weakened export situation going forward. Total U.S. distillate fuel stocks fell 3.54 million barrels last week to 111 million-barrels, the lowest since November. The largest draw on distillates was in PADD 2 (Midwest region) falling by -1.898 million barrels, though that makes sense as planting season has arrived increasing distillate demand, and a high volume of refinery production is currently shut down in the Midwest as a number of refiners are currently undergoing their planned spring plant maintenance.
Market Overview: Oil prices declined by more than 2% on Thursday amid growing concerns over an escalating U.S.-China trade conflict and the potential for a global economic slowdown. The drop followed a highly volatile session on Wednesday, during which crude benchmarks initially plummeted by as much as 7%, before rebounding to close approximately 4% higher after President Trump announced a temporary suspension of reciprocal tariffs on several countries. Despite the short-term recovery, ongoing uncertainty in the market—driven by weakening demand prospects and increased output from OPEC—continues to weigh on sentiment, limiting the likelihood of a sustained rebound in crude prices at this stage.
WTI Chart - Weekly
Today’s chart is a weekly view, which can sometimes help capture longer-term trends, broader market sentiment, and significant price swings over a longer timeframe. Considering we need to go all the way back to February 1, 2021 to see the last time WTI settled under $60.00, this is a less cluttered view compared to a daily chart. The low that the WTI futures hit yesterday was $55.12, a level not seen in over 4 years. The crude market is expected to remain headline driven as markets are expected to remain under pressure. Yesterday’s session is a good example of the extreme volatility with the trading range between the low and high for the day being a whopping $7.81. To add to the instability, OPEC+, which started unwinding its output cuts in April, will advance its unwinding further next month. The WTI market is seen finding support at $51.64, meanwhile, resistance is seen at $63.90 and $64.89.
WTI crude oil futures briefly fell to a daily low of $58.76 per barrel before settling at $60.07, as heightened trade tensions between the U.S. and China reignited concerns over demand. At the same time, the OPEC+ decision to accelerate output increases is further exacerbating fears of a potential oversupply. Additionally, the ongoing closure of the Keystone pipeline following a spill in North Dakota has added to market uncertainty, with no confirmed timeline for its restart.