Iran: On Tuesday, U.S. President Donald Trump reinstated his “maximum pressure” campaign on Iran, aiming to reduce its oil exports to zero to prevent Tehran from acquiring a nuclear weapon. Before his meeting with Israeli Prime Minister Benjamin Netanyahu, Trump signed a presidential memorandum reimposing the stringent policy on Iran that was in place during his first term. While signing the memo, Trump acknowledged the toughness of the decision and expressed his internal conflict about making the move. He emphasized that Iran must not obtain a nuclear weapon and expressed hope for a potential deal with Tehran. Iran is the third-largest producer within the Organization of the Petroleum Exporting Countries (OPEC), produces approximately 3.3 million barrels of oil daily, accounting for about 3% of the world’s total oil output.
Clean Energy: U.S. clean-energy companies will visit Capitol Hill today to persuade Republican lawmakers to preserve valuable tax credits included informer President Joe Biden’s significant climate change legislation. Hundreds of representatives from solar, wind, and other renewable-energy sectors will meet with members of Congress from both parties to highlight their contributions to job creation, investment, reduced electricity costs, and the growing power demand from data centers. President Trump aims to reduce the scope of the Inflation Reduction Act, which includes billions in tax credits designed to support the growth of clean-energy projects.
U.S. Inventories: Yesterday afternoons release of data from the American Petroleum institute are projecting a large build for both crude and gas of over 5 million barrels while diesel is expected to see nearly a 7 million barrel draw. These projections are significantly different from previous estimates from a Reuters poll. The earlier Reuters poll called for a 2-million-barrel build on crude, a 0.5-million-barrel build on gas, and a 1.5-million-barrel draw on diesel. The official report will be released today at 9:30 a.m. central from the Department of Energy.
Market Overview: The focus has shifted from tariff talk to Iranian sanctions and U.S. inventories. With tariffs on Canada and Mexico delayed for a month, the energy complex looks to the fundamentals of supply and demand to find direction in the market. On the hot seat is the Department of Energy report being released this morning with showed sizeable builds on gas and crude and a large draw on diesel. Iran is also in the picture with President Trump's "maximum pressure" approach against Iran in order to stop them from obtaining a nuclear weapon. If history repeats itself, today could be another choppy day.
Heating Oil Daily Candlestick Chart
Since the new year, Heating Oil has had some significant swings in the market. Rallying over 30 cents through the first two weeks of January to falling over 20 cents since then. In the chart we can see levels of resistance sent at the 25-day moving average at $2.4614 followed by the 14-day moving average at $2.4922. Support can be seen at $2.38. The lower half of the chart shows the relative strength index sitting in the middle indicating that the market is not overbought or oversold.
Oil prices fell over 2% today after the U.S. inventory report confirmed a large build in crude stocks. The Department of Energy reported a build on crude of 8.7 million barrels and build on gasoline of 2.2 million barrels. Diesel fuel on the other hand saw a draw on inventory of 5.5 million barrels. Also weighing on traders' minds are trade war fears between the U.S. and China which could slow economic growth. What to watch for the rest of this week will be if WTI crude can test the solid level of support at $70 a barrel. The last time WTI traded at or under $70 a barrel was on 12/27/24.
