WTI Crude Oil Futures (January)

Yesterday’s Settlement: 69.17, up +2.25 [+3.36%]

WTI Crude Oil futures rallied sharply yesterday as the dollar slumped and geopolitical concerns increased. The Biden administration allowed the use of U.S.-supplied long-range missiles for use within Russian territory for the first time yesterday, ramping fears of escalation. This morning there are reports that Ukraine has struck Russian border regions with long-range missiles.

This prompted Vladimir Putin to sign an updated nuclear doctrine expanding the conditions for using nuclear weapons. Russia – Ukraine escalation and strikes on energy facilities are to be watched closely watched.

Today, the dollar is marginally weaker on Yen strength and lower U.S. yields. There is a risk-off tone to trading and commodity buying as crude futures are trading on either side of unchanged. Russian nuclear rhetoric is driving the risk-off tone this morning.

Crude Inventories remain low while managed-money long positioning remains near record lows. If sentiment improves around the 2025 balance sheet outlook, crude oil markets have the potential for a sharp rally.

January 25 Delta call volatility and skew remains subdued and may offer traders an efficient and risk-defined vehicle to gain long exposure.

{Two-Day 30 Minute Chart; January 25DC Vol & Skew}

WTI Crude Oil futures surged on strong volume during the intraday open at 8:00 am CT yesterday, helping to solidify a line in the sand floor at 67.35-67.61 in front of Friday’s settlement at 66.92. It is now clear that a break below these supports is likely to continue lower. However, price action is certainly not in the clear as there is heavy resistance detailed in our levels below, beginning with…

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