Crude Oil and Gasoline Prices Surge Amid Positive Economic Signals
February WTI crude oil (CLG25) is trading up +0.28 (+0.38%), while February RBOB gasoline (RBG25) has increased by +0.0030 (+0.15%).
Current Trends Boost Prices
Both crude oil and gasoline prices are seeing notable increases today. Crude oil has reached a 2-1/2 month high, and gasoline has hit a 1-1/2 month high. A weaker dollar has played a role in bolstering energy prices. Additionally, a report from the Washington Post indicated President-elect Trump will limit the scope of tariffs, reducing potential harm to global trade. A rally in stock prices has also contributed to positive outlooks for energy demand and crude prices.
Market Support from Political Moves
Crude oil prices gained momentum following news that Trump’s aides are considering universal tariffs that target only critical imports. This could lessen disruptions in global trade, thereby promoting economic growth and enhancing energy demand.
Saudi Arabia’s Price Increase and Global Supply Concerns
Further support for crude prices came as Saudi Arabia raised its prices for crude oil to Asian customers for February delivery by 60 cents per barrel—significantly above the anticipated 10-cent increase. This suggests that Saudi Arabia anticipates tighter supplies in its largest market.
Decreased Tanker Supply and Strong Jet Fuel Demand
Another bullish factor for oil prices is a drop in crude oil stored on tankers worldwide, which fell by 33% week-over-week to 48.02 million barrels by the end of the first week of January, according to Vortexa. Additionally, strong demand for jet fuel in the U.S. has emerged, driven by a report from the EIA showing that October jet fuel demand increased by 1.9% year-over-year to 1.73 million barrels per day—the highest level seen in seven years.
Possible Sanctions on Iranian and Russian Exports
Anticipated sanctions on Iranian and Russian crude exports could further restrict global oil supplies, positively influencing prices. National security adviser pick Mike Walz has emphasized a return to “maximum pressure” on Iran, while the Biden administration is contemplating harsher sanctions on Russian crude oil, which may limit market availability.
OPEC+ Production Decisions Affect Supply
Last month, OPEC+ decided to delay a planned production increase of 180,000 barrels per day from January to April. They also stated they would proceed with unwinding output cuts at a slower pace. The United Arab Emirates also announced that they will push back a planned increase of 300,000 barrels per day from January to April. Initially, OPEC+ had agreed to restore 2.2 million barrels per day of output in monthly increments through late 2025, but this has since been extended to September 2026. OPEC’s crude production for November rose by 120,000 barrels per day to 27.02 million barrels per day.
China’s Demand Disappoints
However, China’s crude oil demand has shown signs of weakening, which negatively impacts oil prices. According to Bloomberg, apparent oil demand in China dropped by 2.14% year-over-year to 14.013 million barrels per day in November, with a year-to-date decrease of 3.26% to 13.996 million barrels per day. As the world’s second-largest crude consumer, this decline is significant.
Reduction in Russian Exports
In contrast, decreased crude oil exports from Russia have provided some support for prices. Weekly data from Bloomberg revealed that Russian crude exports fell by 170,000 barrels per day to 2.97 million barrels per day in the week ending December 15.
US Inventory and Rig Count Insights
Recent reports highlight that as of December 27, U.S. crude oil inventories were 5.3% below the seasonal five-year average, gasoline inventories were down 0.4%, and distillate inventories were down 5.9%. U.S. crude oil production for the week ending December 27 also decreased by 0.1% to 13.573 million barrels per day, just shy of the record high of 13.631 million barrels per day set on December 6. Baker Hughes indicated a drop in active U.S. oil rigs, which fell by one to 482 rigs, remaining above the 477 rigs counted in late November. This number has declined significantly from the 627 rigs at a four-and-a-half-year high in December 2022.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
