U.S. Dollar: The dollar strengthened by 0.50%, making crude more expensive for foreign buyers, as the Federal Reserve signaled no immediate cuts in interest rates due to uncertainties surrounding U.S. tariffs there was an indication there still could be a cut later in the year. Tariff concerns, along with rising global risk premiums due to renewed Middle East conflicts, added volatility to oil prices.
Bio Fuels: U.S. and Canadian biofuel producers are reducing output due to uncertainty around subsidies and shifting tariffs, which threaten market stability. The sector faces rising feedstock costs and unresolved regulatory changes, particularly concerning the Biden-era clean fuel tax credit. These challenges have led to plant closures and production slowdowns, impacting rural economies and decarbonization goals. Farmers are also struggling with volatile crop prices and planting decisions amid ongoing tariff threats and market instability.
DOE Report: The DOE report showed a bigger drawdown on refined products than expected. Heating Oil also known as Diesel dropped 2.8 million barrels, gasoline had a draw of 500,000 thousand barrels, and crude oil had a build of only 1.7 million barrels vs the expected 4.8-million-barrel build. This puts Diesel just below the 3-year average, gasoline just at the 3-year average and crude still at a 3-year low. This gives optimism to traders seeing demand is still solid despite headlines being a headwind.
Market Overview: In the grand scheme of things, the prices are relatively flat as we begin the day. The same main headlines are the driving factors. The market is great at digesting news and moving forward, but it is taking a pause to figure out the correct direction. The main triggers continue to be the escalating tensions in the Middle East offsetting the strength of the dollar. Stimulus measures from China, which are being countered by U.S. Tariffs looming. One new headline that is being talked about is the Trump administration is now considering a plan to extend Chevrons license to pump oil in Venezuela. This is a partnership with the U.S. which helps bring in heavy crude oil which the U.S. is net short on each year.
Heating Oil Outlook
Earlier in the week we looked at a crude candlestick chart. This time let's look at a Heating Oil candlestick chart. In the year 2025 so far, we marked a high of 2.6629 on 1/21/2025 and a low of 2.1446 last week on 3/14/2025. If we overlay with a Fibonacci retracement tool which is a technical analysis tool used to identify potential support and resistance levels by plotting horizontal lines at key Fibonacci levels between a high and low point on a price chart. We can see that we are getting a lot of support as we climb up, when you look to the downside you can see the solid black line and looking at history this is a solid support level each time, we got to that level we bounce right off. So, looking at the chart you can see we are in a horizontal position for a bit, but downside will be harder to break than the minor supports to the upside.
Oil prices rose on Thursday after the U.S. imposed new sanctions on Iran, with tensions in the Middle East counteracting the strength of the dollar. The sanctions targeted entities, including a Chinese "teapot" refinery. Teapot refiners are private Chinese refineries that are the primary purchasers of Iranian oil. This marks the first time such refineries have been sanctioned. China is the largest importer of Iranian oil, and Iran produces over 3 million barrels per day.
Additionally, OPEC+ announced new output cuts for seven member countries, including Russia, Kazakhstan, and Iraq, to compensate for exceeding agreed production levels. The cuts will range from 189,000 to 435,000 barrels per day and will last until June 2026.
