Crude Oil and Gasoline Prices Rise Amid Global Economic Shifts
January WTI crude oil (CLF25) is up +0.62 (+0.91%) today, while January RBOB gasoline (RBF25) has increased by +0.0190 (+0.97%).
Market Response to Chinese Economic Policies
Today’s rise in crude oil and gasoline prices can be attributed to a combination of factors. The market is reacting positively to China’s announcement to stimulate its economy, which is expected to boost energy demand. The Politburo, led by President Xi Jinping, has introduced a “moderately loose” monetary policy for 2024, indicating hopes for new fiscal measures.
Impact of Regional Conflicts on Oil Prices
Additionally, the ongoing unrest in the Middle East, especially following the government overthrow in Syria, is contributing to higher oil prices. However, a stronger U.S. dollar today is limiting potential gains in crude prices.
Refining Activity and Crack Spread Rise
The recent uptick in the crude crack spread, which reached a two-week high, is encouraging refiners to increase their crude oil purchases, thereby supporting crude prices further.
Chinese Trade Data Raises Concerns
On a negative note, China’s trade performance is concerning. November exports grew by only +6.7% year-on-year, falling short of the +8.7% expected. Furthermore, imports dropped unexpectedly by -3.9%, marking the steepest decline in nine months. This trend suggests a potential slowdown in global energy demand.
Falling Crude Oil Inventory on Tankers
Another positive sign for crude prices is the decrease in crude oil held on tankers. Vortexa reported a weekly drop of -12% to 62.74 million barrels, as tankers remained stationary for at least a week.
OPEC+ Adjustments and Production Plans
Crude prices found support last week after OPEC+ announced a delay in increasing production by 180,000 barrels per day from January to April. They also revised their plan for restoring 2.2 million barrels per day of output back to September 2026. November’s OPEC crude production rose by +120,000 barrels per day, reaching 27.02 million barrels per day.
Geopolitical Tensions and Their Impact
Tensions resulting from the Ukraine-Russian conflict continue to support crude prices. Recent escalations, including missile launches and threats to target decision-making centers in Kyiv, have amplified concerns regarding oil supply stability.
Weak Domestic Demand in China
Conversely, there are bearish indicators as well. China’s apparent oil demand fell -5.4% year-over-year in October, bringing the January-October average down -4.03%. As the second-largest consumer of crude oil globally, shifts in China’s demand heavily influence worldwide oil prices.
Increased Russian Exports and U.S. Inventory Report
Recent data from Bloomberg indicates that Russian crude exports rose by +570,000 barrels per day to 3.36 million barrels per day in early December, further exerting downward pressure on oil prices. Additionally, the latest EIA report revealed U.S. crude inventories as of November 29 were -5.0% lower than the seasonal five-year average, with gasoline and distillate inventories also showing similar declines. Crude oil production in the U.S. recently set a record at 13.513 million barrels per day, reflecting increased output.
Baker Hughes reported an increase of +5 active oil rigs last week, bringing the total to 482, reversing a decline to an almost three-year low of 477 rigs. This marks a significant decrease from the December 2022 peak of 627 rigs.
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.
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