Crude Oil and Gasoline Prices Drop Amid Weak Economic Signals
Chinese Stimulus and Dollar Strength Pressure Prices
December WTI crude oil (CLZ24) closed down -1.98 (-2.74%) on Friday, while December RBOB gasoline (RBZ24) fell -0.0411 (-2.00%). Weak economic signals from China and a strong dollar contributed to the decline in crude oil and gasoline prices. Additionally, speculation about President-elect Trump’s policies potentially increasing U.S. crude production, along with new tariffs that could damage China’s economy, influenced market sentiment.
Disappointing Chinese Stimulus Measures
On Friday, China announced a 10-trillion yuan ($1.4 trillion) program aimed at refinancing local debt. However, analysts expressed disappointment, as the measures did not meet expectations for stimulating consumer demand and addressing the nation’s struggling housing market. This lack of effective action raised concerns about China’s economic growth and energy demand.
Global Economic Indicators Paint a Mixed Picture
Despite some bearish factors for oil prices, encouraging global economic data helped support energy demand. The University of Michigan’s consumer sentiment index for the U.S. increased +2.5 to reach a 7-month high of 73.0, surpassing expectations. Similarly, Japan saw its September leading index rise +2.5 to a 4-month high of 109.4. In contrast, China’s crude demand weakened, with October imports decreasing by -2% month-on-month and -9% year-on-year to 44.7 million metric tons. Year-to-date, crude imports have dipped -3.4% from last year.
OPEC+ Production Adjustments Offer Some Support
Support for crude prices stemmed from OPEC+’s announcement to delay a planned production increase of 180,000 barrels per day (bpd) for a second consecutive month. In October, OPEC’s crude production rose by +370,000 bpd to 26.9 million bpd, allowing room for market adjustments.
Heightened Tensions in the Middle East
Comments from Iranian Supreme Leader Ayatollah Ali Khamenei suggested increased hostilities with Israel could impact crude supply in the Middle East. The potential for conflict escalation raises concerns about oil distribution in this vital region.
Declining Crude Oil Stockpiles Offer a Positive Trend
Recent data from Vortexa indicated a decline in crude oil stored on stationary tankers, which dropped -8.2% week-on-week to 51.44 million barrels as of November 1. This decline can be seen as a bullish sign for the oil market.
Russian Crude Exports Dwindle
In further positive news for crude prices, Russian crude exports fell by -530,000 bpd to 3.02 million bpd in the week ending November 3, marking a six-week low. Alongside this, Russia’s Energy Ministry reported that its September crude production decreased to 8.97 million bpd, just slightly below its production target agreement with OPEC+
U.S. Inventory Levels and Rig Count
According to Wednesday’s EIA report, U.S. crude oil inventories were -4.6% below the seasonal 5-year average as of November 1. Gasoline and distillate inventories also showed declines. During the week ending November 1, U.S. crude oil production held steady at a record 13.5 million bpd. The number of active oil rigs in the U.S. remained unchanged at 479, just above a 2.5-year low recorded in July 2023, and significantly lower than the peak of 627 rigs seen in December 2022.
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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.
