Crude Oil and Gasoline Prices Show Mixed Trends Amid Global Supply Dynamics
On Wednesday, January WTI crude oil (CLF25) experienced a slight increase, closing up +0.50 (+0.71%), while January RBOB gasoline (RBF25) saw a decrease, closing down -0.0011 (-0.06%).
Oil Prices Supported by Kazakhstan’s Commitment to OPEC+ Quotas
Crude oil prices climbed due to expectations of tighter global supplies after Kazakhstan announced it will adhere to OPEC+ production quotas. However, despite reaching higher levels, crude prices later fell back, matched by a slight decline in gasoline prices following a mixed weekly report from the Energy Information Administration (EIA). Additionally, the dollar’s strength, reaching a three-and-a-half week high, put pressure on energy prices.
Potential Sanctions Loom Over Iranian and Russian Crude Exports
New potential sanctions on Iranian and Russian crude could further restrict global oil supplies, potentially leading to higher prices. Mike Walz, appointed as national security adviser, emphasized a return to strict measures against Iran. Meanwhile, the Biden administration is contemplating harsher sanctions on Russian oil exports, which raises concerns about future supply.
Global Crude Stock Levels Decline
A recent drop in the amount of crude oil stored on tankers supports a bullish outlook for oil prices. According to Vortexa, crude oil vessels that remained idle for over seven days decreased by 9.9% week-over-week, totaling 65.28 million barrels for the week ending December 13.
OPEC+ Adjusts Production Increases Amid Market Conditions
Earlier in the month, OPEC+ made the decision to delay its planned output increase of 180,000 barrels per day (bpd) from January to April. The United Arab Emirates also postponed its 300,000 bpd increase. Originally, OPEC+ intended to gradually restore 2.2 million bpd of production through monthly increments until late 2025, but that timeline has now shifted to September 2026. For November, OPEC crude production showed an increase of 120,000 bpd, reaching 27.02 million bpd.
Geopolitical Tensions Continue to Influence Oil Prices
The ongoing conflict between Ukraine and Russia remains a contributing factor to rising crude prices. Recent missile launches by Russia into Ukrainian cities and warnings from President Putin regarding potential strikes in Kyiv heighten concerns about geopolitical stability and its impact on oil supply.
China’s Crude Demand Declines
Declining crude demand in China may hinder oil market performance. Data from Bloomberg indicates that China’s apparent oil demand fell by 2.14% year-over-year to 14.013 million bpd in November, with a cumulative drop of 3.26% for the year to date.
Russian Export Reductions Offer Support
A noted decrease in Russian crude exports may provide some support for crude prices. According to Bloomberg’s weekly vessel-tracking report, Russian exports fell by 170,000 bpd to 2.97 million bpd during the week ending December 15.
Mixed Signals from EIA Inventory Report
The latest EIA report presented mixed signals for the crude and products market. On a positive note, EIA distillate supplies unexpectedly dropped by 3.18 million barrels, contrasting with expectations of an increase. However, crude inventories decreased by a smaller margin than anticipated, down 934,000 barrels versus an expected decline of 1.7 million barrels. Gasoline stockpiles rose by 2.35 million barrels, exceeding expectations of 2.0 million barrels. Additionally, crude supply at Cushing, the delivery point for WTI futures, gained 108,000 barrels.
Current U.S. Inventory Levels and Oil Rig Counts
As of December 13, the EIA reported that (1) U.S. crude oil inventories were 5.9% lower than the seasonal five-year average, (2) gasoline inventories were 3.3% below average, and (3) distillate inventories were 7.0% below average. U.S. crude oil production saw a slight weekly decline of 0.2%, totaling 13.604 million bpd, just below the previous record of 13.631 million bpd.
Baker Hughes reported that the number of active U.S. oil rigs remained unchanged at 482 as of December 13. This figure is slightly up from a recent low of 477 rigs but has notably decreased from a high of 627 rigs recorded 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 are 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.
