Crude oil futures settle at $78.82

The price of crude oil surged for the second consecutive day. Today they price settled up $2.25 or 2.94%. The catalyst? US sanction on Russian oil.

The details:

• Crude: Crude hit a 5-month high, driven by new U.S. sanctions on Russian crude, which threaten to tighten global supply.

• U.S. Sanctions: New sanctions targeted Russian oil firms (Gazprom Neft, Surgutneftgas) and their export chains, impacting 30% of Russian crude transported via tankers in 2024.

• Russian Crude Exports: Weekly Russian crude exports fell by 190,000 bpd to 2.88 million bpd (as of January 5), supporting higher crude prices.

• Tanker Storage Decline: Crude stored on stationary tankers dropped by 4.8% (to 50.59 million barrels) as of January 10, which is bullish for prices.

• Future Sanctions: The prospect of additional sanctions on Iranian and Russian oil under a potential “maximum pressure” policy could further limit supply and support prices.

Technically, the price moved above a downward sloping trend line and up to the 61.8% of the move down from the April high at $79.07 and up to an intraday high at $79.24. That was the highest level since mid-August. The run higher has seen some profit taking into the close/settlement. However, in the new trading day, getting and staying above the 61.8% retracement at $79.07 would add to the bullish bias.

Conversely if sellers do lean against the 61.8% retracement we could see a rotation back down toward the broken trend line area near $77.50.

This article was written by Greg Michalowski at www.forexlive.com.